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During the course of my interactions with the wide range of people I meet here on campus and elsewhere, the conversation often turns to the subject of social entrepreneurship. These conversations are usually lively and make for a feel-good interaction, but I'm still asked from time to time: What is a social entrepreneur anyway? 

Social Entrepreneurship, Defined

According to Ashoka.org--the global association of the world's leading social entrepreneurs--"social entrepreneurs are individuals with innovative solutions to society's most pressing social problems."

Wikipedia calls a social entrepreneur "someone who recognizes a social problem and uses entrepreneurial principles to organize, create, and manage a venture to make social change."

While social entrepreneurship isn't a new concept, it has gained renewed traction in a world characterized by a growing divide between freedom and servitude. With this heightened awareness, entrepreneurs are defining and distinguishing themselves from others by considering change as currency. And here we are, at the forefront of social entrepreneurship's latest round of reinvention; interest is exploding among students on college campuses today.  

Social Entrepreneurship On Campus

The Deming Center and Leeds School are very involved in social entrepreneurship through curriculum, particularly as part of our Center for Education in Social Responsibility (CESR).  

The Deming Center participates in SEED @ CU, an organization that started as a funded research project to explore the dynamics and impact of social entrepreneurs in the development of sustainable communities. That interdisciplinary effort has now taken on many roles as a convergence of interest in social entrepreneurship is evolving and with the selection of CU Boulder as an Ashoka ChangeMaker Campus.

And there's now a self-organized student group for social entrepreneurship.

Social Entrepreneurship In Denver/Boulder

 During the 2nd Annual Entrepreneurship Day in the fall of 2008, we heard a presentation by Pete Kellner about Endeavor, the organization he co-founded, which has supported funding for almost 500 social entrepreneurs for close to 300 companies. That meant the creation of over 100,000 jobs.

More recently, in Boulder, we have another wonderful example of an organization created to raise funding for social entrepreneurs: The TouchPoint Trust Group, founded by Casey Verbeck and colleagues. 

One of the most exciting new organizations to be launched in Boulder is The Unreasonable Institute.  Through a wonderfully creative model, the Unreasonable Institute has raised funding to sponsor 25 social entrepreneurs from 17 countries to attend a 10 week intensive summer incubator program.  It will be a 24x7 live-in intensive experience with over 50 mentors and the opportunity to develop amazing networks.  The founders of the Institute are all recent graduates of CU Boulder; the network of mentors, the creativity of their model, and the nature and quality of the social entrepreneurs that were selected for this summer's Unreasonable Institute--their first--are truly extraordinary.

We welcome, as always, your thoughts and observations about this topic, and encourage you to share your experiences with us, either in person, or online. 

To learn more about the Unreasonable Institute, watch episode one of Unreasonable TV.

It's not that we throw caution to wind, or that we like to invite mid-March madness.  It's that we're entrepreneurs; we're comfortable with taking some level of risk. And perhaps that's why CU's Entrepreneurship Week is taking place now--during the ides of March.  And so far, things are shaping up fine. No offense, Shakespeare.  In celebration of entrepreneurs everywhere, some nice events are taking place from March 11-19 all around the CU campus.  Entrepreneurship lovers, risk-takers, movers and shakers, take note of some key events:

The CU New Venture Challenge is in full swing right now, with the semi-finals, finals, and winner announcements happening today--Friday, March 12, 2010 at ATLAS.

The Deming Center and Silicon Flatirons will welcome an all-star cast of entrepreneurs including Tyler Tisdal of Mantucket Capital and Brad Feld of Foundry Group at Entrepreneurs Unplugged on Monday, March 15, 2010.  See the Silicon Flatirons site for more information and to register to attend free.

In further keeping with our commitment to cross-campus cooperation, the Deming Center is teaming up with CU's Tech Transfer Office and CIMB--Colorado Initiative in Molecular Biotechnology--to bring you a special lunch and networking event we're calling "Entrepreneurship Under the Microscope:  A Celebration of CU Research and Technology."  This gathering of biotechnology, entrepreneurship, and technology enthusiasts takes place Thursday, March 18, 2010 at Folsom Stadium Club.  For more information, location, agenda, speakers, and tickets, please visit the E-Week Luncheon Web site at http://eweek2.eventbrite.com/ 

We hope to see you this week and beyond.  How are you spending E-Week?

Part of the excitement of a campus location is that the action is everywhere. Case in point:  Four teams will via for not just prizes, but the attention of an all-star judging panel, in the next CU New Venture Challenge.   Here's more from the good people at CU NVC on the upcoming finals.

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The CU New Venture Challenge Finals are this Friday, 3/12 beginning at 2pm in ATLAS 100 on the CU-Boulder Campus and are open to the public. Don't miss the watching the top four teams pitch their business plans to a panel of judges including venture capitalists, angel investors and serial entrepreneurs.

Prizes include:
•    1st - $6,000
•    2nd - $3,000
•    3rd - $2,000
•    Judges Choice - $250
Now in its second year, the CU New Venture Challenge is a campus-wide initiative connecting students and faculty with teammates in a broad range of disciplines and with mentors from the business community. The goal is to provide knowledge and experience making entrepreneurship accessible to anyone with the enthusiasm and creativity required to start a new business.

Highlights of the 2010 CU New Venture Challenge include:
•    $15,000 in cash prizes
•    More than 20 teams in fields ranging from information technology and Internet to music and outdoor recreation
•    Dozens of mentors sharing their entrepreneurial experience with competition entrants
•    Seven workshops and "crash courses" on topics such as intellectual property, economic sustainability, and how to build a company from concept to completion
•    Networking events connecting CU students with employers and building a sense of community among Colorado entrepreneurs
•    145 Facebook members and 463 followers on Twitter
•    At least one CU student, employee or faculty member per team

For the second year in a row we were offered the extraordinary opportunity of having a group of students from our MBA program spend the better part of a day with Warren Buffett in Omaha.  Mr. Buffett regularly sets aside days to meet with graduate students, usually inviting groups from about five schools at a time.  This year our students joined graduate students from IBMEC from Brazil, Texas A&M, Harvard Business School,   University of Southern California, and UCLA.  Last year I accompanied the group.  This year Prof. Chris Leach made the trip; here is his guest blog about his experience.  First year MBA student Matt Reisman will also be contributing his account of the trip in a second installment.
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I love it when it all comes together!  I arrived Thursday night early enough to connect with Matt Reisman on the schedule for the next day.  My initial stress of wondering if everything would click on this quick turn visit to Omaha dissipated.  Looking out of my hotel window into the frigid Nebraska weather, I wondered how much outside walking around we had in store.  
The day started early, and after a buffet breakfast with one of the other early risers, I had the good fortune to be asked to join three of the second years (all former students of mine) in a rental car parked in the garage.  Accepting the offer made luggage storage, staying warm, and that evening's free transfer back to the airport easier.  Who could refuse? 

The day of meetings began.  I thoroughly enjoyed the Nebraska Furniture Mart visit - particularly the disclaimer regarding IKEA as a threat.  I had the good fortune there to meet up with a research colleague chaperoning the team from University of Southern California.  Having known him since my early professor days on the East Coast, it was easy to renew acquaintance and receive a recommendation for  a recent paper of mutual interest.  (Some of my historical research contributions and his are closely related.  He hired one of my PhD students while at the Securities Exchange Commission; after the SEC, he hired her again for a California-based trade facilitation firm.)  From there it was onto headquarters and Mr. Buffet who was already talking to students prior to the arrival of most of the visitors.
 
It is really striking how much Mr. Buffet enjoys the interaction and how he genuinely expresses his concerns and hopes for business students and their impact on future business practice and success.  As usual, his advice was "down to earth," practical, and touched on personal and professional aspects.  From the perspective of a Finance Professor who has spent some time trying to interpret some of Mr. Buffet's remarks, I was happy to hear him urge the students to delve into companies' financials making sure they can see a path to extracting investment returns.  So often, Mr. Buffet's public remarks are interpreted as broadly hostile to financial analysis and modeling; it was great to hear him more clearly advocate a role of traditional fundamental analysis (even if it involves modeling financial statements).  At lunch, it was clear that Mr. Buffet was a most generous host with a welcome seated lunch for everyone and patience during the prolonged photo shoot with literally all of the visitors (the best I can tell). 

After lunch, we were off to visit another jewel in the Berkshire crown - Borsheim's jewelry store.  The management and retail representatives were gracious in overestimating my tastes, wealth and income (or at least pretending to do so) and were friendly and accommodating to our large group.  On the ride to the airport the "free ride" hit a rough patch.  In a previous meeting with some of these same MBA students, we had discussed my class usage of brain teaser interview questions and how the group was looking to add one or two to their class presentation.  Given the background, why not introduce a new brain teaser puzzle they encountered on the airplane ride to Omaha, and see if I could solve it before arriving at the Omaha airport?  The ante was upped with the added wrinkle of having the teaser officially marked as "Intermediate" to increase the pressure.  Fortunately, I didn't spend all those years in sports to crumble under the pressure of a brain teaser airport transfer in Cornhusker territory.  There's no substitute for training in hostile conditions.  But fair is fair, and finance is known for its "no free lunch" and "no free ride" maxims.  So, I went to work ...

Overall, it was a great trip; quick and to the point; fun for all involved.  Thanks to all those who planned and supported.

--Chris Leach, CU Boulder

A decade after the dot-com boom introduced us to the idea of entering our credit card numbers into our Web browsers, the world of purchasing and customer interaction has gone online.  Most of us purchase most of what we buy over an Internet connection.  Some websites do a really excellent job of making it simple, intuitive, friendly and straightforward. They've cracked the code on making ordering fun, and the experience of friendly, flexible sites can be very rewarding.  But when things go wrong the contrast is maddening.

A recent example:

A few years ago I purchased my first portable, automobile purposed GPS unit.  I'd used the technology as a pilot, but really had little interest in it for the purposes of navigating my car.  I realized that my lack of interest applied to installed units, since most of my driving was local. But that changed when the units became small and easily portable, and thus became useful for travel.  I was pleased with my particular Garmin product.

I'd updated the unit online in the past, and recently began receiving alerts that it was once again time to do so.  I linked it to my laptop, logged in, verified my personal account and unit serial number, selected the lifetime map upgrade option and triggered the download. Knowing that my unit was registered and identifiable by serial number, and that the download I'd selected was specific to that unit, it never occurred to me that I would experience what followed.  

After a download lengthy enough for a cup of coffee, I followed the prompts to the next step, which was the upload to my GPS unit.  About 2/3 of the duration, as indicated by the progress bar, the upload was canceled; I was informed that my unit had insufficient memory for the upgrade.  So sorry!  No suggestions, explanations, or alternatives.  And no prompt to enable me to cancel the order.  

I abandoned the convenience of my online transaction and dialed customer service , only to learn that,  yes - I had ordered the software. And that--no - they would not refund the upgrade I couldn't use.  The "free prize inside," as Seth Godin might call it, was a transfer to sales to purchase the required memory card.  I If I'd looked closely at the system requirements page beforehand (the representative actually used the words "fine print"), I would have foreseen and avoided the problem.   Conclusion - I have been happy with my use of the Garmin product.  It's almost 3 years old, however, and, given the improvements that have been made with newer units and displays, I will be ready for an upgrade soon.  In the meantime I have no desire to spend much on an older unit.

Of course I'm picking on Garmin as an example that entrepreneurs today have to decide carefully which mechanism they would rather support and repair: the widget or the relationship.    A credit offered in the spirit of keeping my business over the long haul seems smart.   In light of my experience, what would motivate me to  consider their product line?  

Technology is a good thing; common sense is too. BTW - I did succeed in obtaining the refund.  I hate to think of matching the amount of the refund to the value of the time I spent on the phone. If my story is demonstrative of anything, it's that no matter the demographic, the market segment, no matter the medium through which we conduct our business, the experience economy is upon us.  Consumers consider more than the quality of the product and its feature set, especially since the Internet has introduced everyone to the concept that good things can be free.  Capitalizing on the intangibles is the tricky task of today's entrepreneur.  

Perhaps this is why companies such as Zappos.com are so vocal about choosing to focus first on customer service, transparency, and empowering the people who are in front of the customer--either physically or virtually--to do what they think makes good sense.  The next time I'm shopping for a GPS unit, I'll plan on using my good sense, too--and my memory.  

The following is a guest post by Mark Wiranowski, CU law student and member of the CUNVC executive committee:

Jason Mendelson, Co-Founder and Managing Director of Foundry Group, a Boulder venture capital firm, kicked off the New Venture Challenge Crash Course series to a packed house last night.  His wealth of experience - software engineer, then deal attorney, then venture capitalist - came through in lively style.  He's not afraid to call a spade a spade, either.  Take his advice on very early stage financing:

"Do you really need financing yet?  Early stage financing is very risky, and therefore, expensive.  I'm going to act more like a loan shark than a VC.  An angel investor will give you a better deal.  Create value and the money will follow."

This was the first in an every-Wednesday "Crash Course" series put on by the New Venture Challenge.  Each workshop is presented by a seasoned entrepreneur or business leaders.  Mendelson's talk, titled "How to Build a Company," dished out advice and highlighted common mistakes:

"You need a partner who complements your skills.  The biggest red flag for me as a VC is someone starting a company solo."

"Most people fall down on estimating the competition.  Lots of entrepreneurs say, "We are different."  Are you really?  Take social networking sites; your competition might just be your customers' time."

"Marketing and advertising will not save you: Every marketing guy knows that half of his budget is wasted; he just doesn't know which half."

Mendelson also praised Boulder as a place to build a company.  Successful entrepreneurs are happy to mentor those starting out, and the city is one of the most socially-networked that he's worked in.  Mendelson illustrated with a parting shot.

"What should you say to a Sand Hill Road venture capitalist?  Compliment him on his Ferrari."

Below are the slides from Jason's presentation.  Thanks Jason!  Here is the video of the crash course.

I recently attended a 2010 Outlook for the Investment Banking and Venture Capital industries, an event hosted by Polsinelli Shughart PC . In addition to thanking Polsinelli Shughart, I'd like to acknowledge two excellent speakers featured at the event: Wayne Nielsen of W.G. Nielsen & Co. and Stephanie McCoy, most recently a venture capitalist at Meritage Funds.

Stephanie, speaking from a venture capitalist's perspective, addressed the liquidity crisis; Wayne, who made some remarkably accurate predictions last year for 2009, made 2009/2010 economic observations that contrasted the carnage of 2008 with some encouraging trends from 2009. Both speakers highlighted the lows, but followed with some signs of promise.

What everyone wants to know is: How do we work our way out of last year's economic abyss, and when do we see a light at the end of the tunnel? What is the impact that the absence of capital markets will make on the types of innovative, early stage businesses that characterize our Colorado business community, especially in the emerging business sector of renewable energy and other sectors that are at the heart of our economic health?

Here are some notes from both presentations and key takeaways from the event. Any editorial commentary is my own!

A Venture Capitalist's Perspective

• Institutional investors all but disappeared in 2008 and through much of 2009, leading to the precipitous decline in funding to the VC industry.

• Institutional commitments to venture firms were $5B year-to-date in 2009; down from $23B in 2008 and $40B in 2007. (The number was $80B in 2000).
• The number of venture investments followed suit, both in number of investments and in the size of the investments.
• Early stage companies were hardest hit. $2.4B went to 536 companies in 2009 (YTD); down from $6B invested among 2550 firms in 2008, and $7B to 2852 companies in 2007.
• Exit strategies became a memory of the past. The IPO market ground to a halt- especially for small cap firms. And as Wayne predicted, M&A activity in 2009 has declined more than 40% from 2008 and more than 80% from 2007.

The result: Companies retrenched and venture firms marshaled their remaining capital.

And there are some seemingly favorable indicators of an improvement in the venture industry, as seen in a survey of the top 100 institutional investors.

• Despite a virtual stoppage of venture sector investments, over 90% of surveyed firms indicated their intent to continue to invest in venture capital firms.
• More than 30% indicated that the level of their investment as a percentage of their allocation would increase.
• Only 6% indicated their intention to reduce their percentage exposure to venture capital investments.
• Private equity funds currently have approximately $400B in investment capital available, while commercial banks and lending institutions have approximately $1.2B in cash assets.

What's not so clear is: How much remaining capital have VC firms retained that is not likely to be limited to follow-on investments?

An Investment Banker's Perspective

There is no question that the picture here is complex. Without a healthy investment banking industry, the parties affected by the events above are absolutely affected by the lack of access to capital along the way. They are critically affected by the inability to achieve liquidity events through public markets or M&A transactions. We hear much in the press--repeatedly--about economic sectors: Retail sales and consumer confidence, low housing starts, mortgage foreclosures, the federal debt, and the implications of the bailout.

Despite Warren Buffett's admonishment, "Anyone who thinks the market knows the value of anything needs to do more homework," some indications of favorable trends include:

• The DOW, Nasdaq Composite, and the S&P 500. They're all up between 60% and 70% since March of 2009.
• Low price/earnings ratios and skyrocketing worker productivity. Decade-long highs indicate a likelihood that business profits will improve.
• Increasing U.S. manufacturing activity throughout 2009.

Physics warns us, however, that for every force there is an equal and opposite force. Many of these indicators mirror the relationship between high productivity and high unemployment, etc.

The IPO market seems to be returning.

• Q3 2009 saw an IPO volume of 20 deals producing $5.8B of equity investment.
• As of October there were 34 registrants in the IPO pipeline, up from 28 registrants seeking $7.6B on June 30, 2009.
• Only 12 companies went public in the first half of 2009; 8 were US-based.

What does this mean for Colorado and its sustainable startups?

The venture capital landscape in Colorado is experiencing some uncertainty with a number of firms in fundraising mode. Our venture investment reality is that 80-90% of venture capital comes from out of state. At the same time there's another development occurring. We are experiencing an explosive emergence of the cleantech/renewable energy sector which saw 76 Colorado companies apply to make presentations at this year's 22^nd annual NREL Industry Growth Forum. About the same number of applications came from California, and is almost double the number of Colorado-based applications from the previous year. However, while the general impression seems to be that regional firms are having difficulty raising money, the reality is a bit more mixed in my mind as evidenced by (if my facts are correct) a number of firms that have in fact raised money within the past few years: Foundry Group, Altira Group, Infield Capital, Access Venture Partners, Boulder Ventures and Meritage Funds. And there are other smaller funds emerging on the landscape. Demonstrative of a transition, Altira Group is, and has been, entirely focused on energy technology. Infield capital was formed to focus their investments on cleantech-related vehicle powertrain technologies, and Access Venture Partners has become active in the cleantech space.

During a follow on visit with Stephanie, we discussed the regional VC landscape. She agrees that, while the cleantech sector is an area of great opportunity, it's relatively immature; it struggles with uncertainties around government policies and subsidies, and developing convincing business models. We both were reminded of Colorado's cable industry during the 1970s--how it developed a critical mass here, despite regulatory challenges, and was supported by some of Colorado's most prominent venture capitalists, visionaries, and leaders.

We know that venture capital flows to great new ideas in the hands of seasoned entrepreneurs. Perhaps we're going to see a similar evolution in the cleantech space, and the influx of established energy companies will attract capital and new management talent. Do we have the necessary ingredients? I invite your views.

Graduate Entrepreneurs Association (GEA) - Annual Fall Retreat

I thought I'd take a break from a series of things that I've written about -- the myths and realities of entrepreneurship and education -- to report on another fantastic event, our annual GEA Retreat, which I attended last Friday.  The purpose of this annual fall event is to welcome new MBA students to the program and to our business community; to give them a taste of the entrepreneurial Kool-Aid that defines Boulder.

This event, organized by the GEA, and sponsored by the Deming Center, has been a tradition for several years.  This year it was held at Chautauqua.  In most past years it has been held at a venue far up in the mountains - great introduction to Colorado for our out-of-state and international students - but logistically challenging.

 (The distance and high altitude nature of past locations also contributed to it being called a "retreat"- despite my constant observation that to use the words "retreat" and "entrepreneurship" in the same sentence is an oxymoron.) 

We had close to 100 attendees this year - mostly 1st year MBA students, a number of 2nd year MBA students, as a number of faculty members, and about 20 participating speakers and panelists as well. Click here to see the list:
GEA Retreat 2009 - Speaker List.pdf

Special thanks to the participants who served on panels entitled "Young Entrepreneurs," "Finance," and "Awesome Entrepreneurs."  (I thought they were all awesome.)  Great stories, lots of lessons learned, and truly inspiring.  I walked away with several new insights and several more stories for the telling.

But no take-away was more compelling, once again, then the willingness of Boulder's entrepreneurs to give their time to provide help and perspective for our students that are interested in taking advantage. Tim Falls noted well the unique openness and approachability of the Boulder entrepreneurial community.

Thanks to Tim and to Jay Wilson who organized this year's event and to all of the panelists and participants who made it such a successful day.
 

Ashoka

As enjoyable as the GEA Retreat proved to be,  I was sorry to miss another milestone event on campus.

The University of Colorado (CU) has been named a "Changemaker Campus" by Ashoka, the largest association of leading social entrepreneurs in the world. The partnership brings together students, faculty, and staff from across campus to transform the university into a hub for social change.

The Initiative kicked off with a weekend retreat, featuring visits by Lynn Price, Ashoka Fellow and Founder, Camp to Belong,  Chris Pelley and the Ashoka U team. Thanks to Lennon Flowers and Erin Krampetz for organizing the three-day event.

Stay tuned - more to come on the topic of social entrepreneurship.
 

During one of my first entrepreneurial experiences - as part of the management team of an early stage software company - a group of us was sitting around late one night at the end of a challenging day.  One of the guys observed that everyone in the room had left a much larger company to join our relatively small one for similar reasons - to escape the policy and procedures, the layers of management, and with a personal desire to have a bigger, direct impact on a business. And yet we had just spent the better part of a couple of days attempting to draw from those prior experiences in order to implement many of those same processes into our new business!  We all realized that it had become necessary to bring some order to what had become a pretty chaotic situation. 

I frequently encounter misperceptions, or myths as I call them, about entrepreneurship and entrepreneurial environments.  Among them that entrepreneurship is narrowly defined, that it's about only small companies, and that in education it is somehow a lesser business skill than the traditional disciplines of business - finance, accounting, management and strategy.  I call one of these myths the "Big Bang Theory" - that it's all about finding the big idea and that the idea alone will create the success.   That oversimplified perspective ignores the hard work and tenacity that are required for entrepreneurial success.   I've also experienced a corollary to that view during a discussion with a Leeds MBA student.  The student expressed his amazement at the creative entrepreneurial energy that he'd observed since joining our program at the Leeds Business School.  But he was about to disqualify himself from pursuing an entrepreneurial career because he felt that he lacked "the big idea."   These misperceptions can cast a negative view on the perceived value of an entrepreneurship education and how a curriculum that emphasizes entrepreneurship can have broadly applied value.

I recently had a conversation with a group of Leeds MBA students about these topics - about the fundamental importance, value and applicability of entrepreneurial skills.  The process of building an entrepreneurial company --startup or emerging growth-- requires the application of all business skills in what I would describe as the most difficult management environment - one that is undercapitalized, rapidly changing, unpredictable and often seemingly chaotic.  To succeed in such environments, entrepreneurial businesses must have the best talent - the best financial skills, the best marketing skills, and the best strategic selling skills.  These companies can't afford to compromise because they have so little margin of error.  The key is that the members of an entrepreneurial team not only have those specific skills but that they can apply them in such a challenging environment.

At the end of the day, entrepreneurship is still about basic business and management fundamentals - just applied in a demanding, challenging, innovative and highly rewarding environment.  That's a great combination to strive for in any business career.