How many times have you heard the words ‘investing in people’ as a nonprofit slogan or a corporate tagline or touted as an international development policy? That phrase has been recycled into many different avatars in as many contexts. But what if you took this phrase literally? What if you could actually invest directly in people, the way you would in a company, and receive dividends per an equity stake in their future income?
Hold your horses – this isn’t as crazy as you think. Investor, visionary, and fan of PopTech Rafe Furst, just invested in “Marge,” someone he believes is a superstar in the making, for a lifetime share in her income. Furst wrote an incendiary blog post about his decision, spawning a litany of polarized opinions ranging from praise (“brilliant”) to aversion (“this is a form of slavery”) to personal attacks (“you’re an a@# with more money than sense”). Change.org’s Social Entrepreneurship blogger Nathaniel Whittemore picked up the story and began a discussion with a number of social entrepreneurs and investors.
Three distinct models of people-to-people investments emerged in the ensuing discussion:
I. Furst found a single superstar he trusted who he thought was worthy of investment and added a lifetime equity stake to a deal built on a personal relationship of mutual trust. The Personal Investment Contract (PIC) Furst placed in the public domain is just three pages long because it stems from that trust. Furst’s deal is replicable by other investors but not scalable because of its personal nature.
II. SE Fund: Equity investment can be a funding apparatus for select superstar social entrepreneurs through a nonprofit trust issuing shares in their aggregated future income. Four entrepreneurs in the discussion put their lives on the line, eager for this type of investment. Interestingly, they all plan to re-invest the funds in their own organizations, whereas Furst’s original intent was for such funds to ease the investee’s life and not replace investments in their startups. He sees the two types of investments as complementary.
III. Enzi: People investments can be scaled in the context of education. Whittemore included me in the discussion because I founded Enzi, a social venture that lets people invest in students’ education in return for a share in their future income for a set period of time. Enzi is currently conducting a pilot at Stanford and securing investments in its first class of Masters EE students.
The following issues arose for discussion across these three models of people investments:
I. Legality – Can investments in people for an equity stake in future income be considered legal? Yes, certainly. Furst and Enzi had legal counsel write the people investment contracts in use. SE Fund advocates will consult a law firm in the new year to sort out possible tax issues that might arise with their model. Depending on the number and types of investors involved, any people investment model might have to investigate securities law.
II. Buyout clause – While it’s psychologically important to have a buyout clause from a future income contract, it can serve different purposes, depending on the model. Furst’s contract has a buyout clause that he considers a red herring – if it isn’t triggered, it’s a bad deal for somebody. A potential SE Fund investor was hesitant about including a buyout clause because it might incentivize the investee to leave the social mission-focused world for a high-paying job to afford buyout. Since Enzi’s investments are specifically for education and don’t involve lifetime income, its buyout clause is more akin to an early loan payoff for students who experience financial windfall such as cashing out on the soaring star of a startup company.
III. Investor preferences – Most people agreed that social return, not just financial, is an enormously motivating factor in all these people investment models. According to Furst, depending on whether the investee was ‘for-profit’ (ex. businessman), ‘non-profit’ (ex. researcher), or in-between (ex. social entrepreneur), he would rely on the percentage of income, the buyout, or a blend of both for his return.
A potential SE Fund investor was willing to take a discount on financial return for the entrepreneur to remain focused on social mission. If his investee jumped ship for the security of McKinsey, he would consider his investment a failure. Another investor considered it a worthwhile deal only if she could add value to the investee beyond money, in the form of a network or connections.
Enzi will entertain the preferences (ex. major, school, national origin) of investors who can invest in a fund of students with those criteria. We believe we’ll attract investors who altruistically re-invest their returns in other students as well as those who are drawn to sound financial returns.
IV. Investee preferences – Furst didn’t disclose much about his investee “Marge” except to say that he shared a close mentor relationship with her.
The entrepreneurs considering the SE Fund deal have personal preferences regarding their investors. One entrepreneur cautioned – ‘you become who invests in you.’ He would take the deal if only for the privilege of having someone he trusted and respected literally invested in his future. Some were inclined to have several investors as a board of trusted directors for their lives while some hated the idea of pitching to a forum of angels because one dissenting investor can influence the judgment of others.
Enzi aims to unlock latent potential in students. Its income-aligned education funding keeps students from fixed-amount crippling debt, enabling them to pursue their passions. In addition, students are paired with investor mentors who help support their professional growth.
The major differences between the three models lie in motivation, desired outcomes, and scalability. Furst has already determined that “Marge” is a winner and is motivated to add value, both personal and financial, to her hard work. His desired outcome is the value they will collectively generate over her lifetime. He pointed out that his model is inherently non-scalable because everyone has different ideals for a superstar candidate they would link with for life. The motivation of the SE Fund is to use people investments as a solution for the funding problems social entrepreneurs face, and the expected outcome is the social impact on the world that these entrepreneurs will generate on account of the investment. The SE Fund can be scalable if its advocates are able to agree on the right mix of investors and entrepreneurs. Enzi is motivated to create a paradigm shift in education finance by providing equity investments in education as an alternative to student loans. Its desired outcomes are removing the financial barrier to education and facilitating increased lifetime earnings and improved quality of life for students. Enzi’s model is scalable: it offers time-limited contracts explicitly for the purpose of education and lets several accredited and non-accredited (‘retail’) investors collectively invest in funds of talented students.
It’s exciting to witness the evolution of these people investment models. Though they target different stakeholders, they can and should coexist – they have potential to be powerful forces of social change. Here’s one vote for people investments as a panel topic at SoCap10! Do I hear another?
Ashni can be contacted via email (ashni [at] enzifutures [dot] org) or Twitter (@ashnimohnot).
New York Designers Propose Ideas for New York Transportation, Navigation, and Waterfront Development
Two weeks ago, GOOD and CEOs for Cities held a Manhattan event where Alissa Walker, a design writer, and Scott Stowell (of NY design agency Open) moderated six design teams proposing solutions to New York societal problems.
Below, excerpts from presenters Jake Barton (Local Projects) on the appeal of bicycling as alternative transportation, Brett Snyder (Cheng+Snyder) and Guy Zucker (Z-A Studio) on wayfinding in Times Square, and Colin Brice and Caleb Mulvena (MAPOS) on waterfront development in Sunset Park:
What do you think about these proposals?
“You’ve got to start from the bottom and work up. And if you don’t, I guarantee it will always be too costly.” Dan Nocera, PopTech 2009
With global leaders in discussions about climate change, PopTech releases three talks this week from energy researchers approaching the problem from other angles. MIT chemist Dan Nocera shows how we can move from the grid to personalized energy, spatial designer Laura Kurgan demonstrates there are no neutral maps, and scientist Nicole Kuepper creates photovoltaic cells out of nail polish, inkjet printers, and pizza ovens.
MIT Professor Dan Nocera believes he can solve the world’s energy problems with an Olympic-sized pool of water. Nocera and his research team have identified a simple technique for powering the Earth inexpensively—-by using the sun to split water and store energy—-and thus making the large-scale deployment of personalized solar energy possible.
Architect Laura Kurgan is the Co-Director of the Spatial Information Design Lab at Columbia University. Kurgan visualizes complex political and social data to advocate for social reform. One project, “Million Dollar Blocks,” shows how the government spends more than one million dollars to incarcerate prisoners who live within a single census block.
Ph.D. candidate Nicole Kuepper has been passionate about solar energy since she received a toy solar-powered car for her 8th birthday. Kuepper has recently patented a simple low-temperature process for printing low-cost solar cells that could make solar energy affordable across the developing world.
- Watch a video of Nicole working on photovoltaic cells in the lab
- Read the abstract for the UNSW inkjet solar cell scientific paper
- Learn more about the UNSW School of Photovoltaic and Renewable Energy Engineering
For more, follow PopTech photographer Kris Krug’s Flickr photostream for the latest Copenhagen images, find out why activists the Yes Men (who presented at PopTech 2006) helped coordinate and release a fake press release on behalf of the Canadian government Monday.
More climate change links:
What do you think about these energy ideas? Where are you following COP15 coverage?
This year at PopTech, choreographer Gideon Obarzanek, who directs Chunky Move (an Australian dance company) spoke about designing movements for dancers that play with light.
To play with light, his Chunky Move dancers interact with software designed by Frieder Weiss, an “engineer in the arts.”
Frieder is in New York this week with Chunky Move for their “Mortal Engine” run at BAM (performances until Saturday, details below).
He talked yesterday afternoon about his EyeCon software (released for use), the unreleased Kalypso program used in “Mortal Engine,” how his lighting is live, why sound can be less accessible than light, and the frozen project he is working on next:
You can buy tickets to Chunky Move at BAM, tonight through Saturday.
And here is Gideon Obarzanek’s 2009 PopTech talk:
Questions for Frieder? Leave a comment below.
Editor’s note: Beth Cohen is PopTech’s Director of Media Production. She made the below video to give everyone a taste of winter in Camden, Maine, where PopTech holds its annual ideas summit and where one of the PopTech offices is located. Here’s how she describes the weather yesterday.
First snow day of the year. All the local schools were closed, and many businesses closed early.
First it snowed, then it got really windy, then it started pouring rain. Winter is finally here.
This week in PopTech 2009 video releases, find out the difference fifteen minutes can make to a child’s cognitive performance in parenting guru Ashley Merryman’s presentation, why school turnaround visionary Steve Barr thinks private school should be outlawed, and the way legendary teacher Dennis Littky has transformed student performance through personalized curriculae.
According to Steve Barr, the fastest way to fix education in America would be to make private schools illegal. As the founder of Green Dot Public Schools, Barr is devoted to improving public education in blighted cities. His efforts have transformed high schools across Los Angeles into charter schools that send nearly 80% of students to college.
- Read the May 2009 New Yorker piece, “Steve Barr’s crusade to remake failing schools”
- Attend the Green Schools Benefit, February 11, 2010 in Venice, CA
- Find out about the recent Gates Foundation grant to Green Dot Schools
Watch Ashley Merryman on parenting:
Ashley Merryman has co-authored numerous articles about parenthood. Over the past two years, she and journalist Po Bronson have collaborated on an award-winning series of articles in New York Magazine. Their most recent work, a book titled NurtureShock, explores cutting edge research that challenges many familiar myths about how to best parent kids.
The co-founder and co-director of Big Picture Learning, Dennis Littky believes that cookie-cutter teaching fails too many students. So Littky works to make alternative, non-standardized curriculums the new standard. Big Picture now has more than 70 schools nationwide.
- Start a Big Picture School and become a staff member or volunteer
- Attend an event with Big Picture Learning
- Read an April 2009 Education Week article on five faulty assumptions in education policy
Between impact investing and mergers, Bernholtz talked about B Corps, the designation for businesses holding a social good certification (think LEED for social enterprise) from a group called B Lab.
Of the 240 businesses are certified in the U.S. as B Corps, nine in Philadelphia have an additional reason to pay a tenth of 1% of their net sale to hold the certification. Last Thursday, Philadelphia’s City Council unanimously approved a bill to give a sustainable business tax credit to certified sustainable businesses in the city. The first financial incentive for sustainable businesses in law in the U.S., the new bill allows twenty-five companies in Philadelphia to receive the tax break.
Co-founder of B Corporation, Jay Coen Gilbert describes amending a company’s articles of incorporation to include B Corps “changing the DNA of a company.”
Individually, each certified company is a B Corp—together, they are B Corps.
As the “corps” entry in the online dictionary Wordnik (watch Wordnik Founder Erin McKean’s 2006 PopTech talk) aggregates definitions, synonyms, images, tweets, tags, and etymologies about different meanings and content around the term, we hope that sustainable businesses for social good will continue to find new reasons to become, as the American Heritage Dictionary defines “corps”: “a body of persons acting together or associated under common direction.”
To mark the 40th anniversary of the Internet, today DARPA released ten balloons for the DARPA Network Challenge, a competition in online and social network cooperation with a $40,000 prize.
“The Network Challenge winner will be the first individual to submit the locations of 10 8-foot balloons moored at 10 fixed locations in the continental United States. The balloons will be in readily accessible locations and visible from nearby roads.”
The contest end at 12:00 PM EST on December 14, 2009, and one team has another motive for the prize money.
Stan Wiechers and Carlos J. Gómez de Llarena’s team, @ballooncharity, wants to give 100% of the prize money to the Aga Khan Foundation to support programs that may help rebuild Afghanistan.
From the Balloon Charity site,
“DARPA is betting on people’s self-interest to motivate them during this giant crowdsourced guinea pig test. We want to bet on crowdsourced altruism. One of these motivations will emerge as the driving force behind the winning team.”
The team is always using the hashtag #scoutsforgood to mobilize team members.
Want to play? You can find the rules on the DARPA Network Challenge site.
The best way to follow or join the Balloon Charity team is through their @ballooncharity Twitter account.
Where does design meet nature, technology meet dance, and kinetics meet sculpture?
This week, new PopTech videos are on interactions: biomimicry architect Neri Oxman shares her favorite natural form, sculptor Reuben Margolin creates sparkling waves of light, and choreographer Gideon Obarzanek outlines ways dancers move with each other and the spaces inbetween. And, we’re pleased to share an opportunity for PopTech Friends to see Gideon Obarzanek’s latest dance performance at the Brooklyn Academy of Music.
We’re going to see Chunky Move on December 9th at BAM, and we hope to see you there.
Hailed by The Australian as the country’s best modern dance company, choreographer Gideon Obarzanek’s Chunky Move dazzles audiences with its use of site-specific installations and interactive sound and light technologies. Obarzanek’s avant-garde performances explore the tensions between the rational world we live in and richness of our imagination.
Special Offer for PopTech Friends: 15% Discount for Mortal Engine, Dec 9 – 12
Dec 9—12, BAM, Howard Gilman Opera House, 30 Lafayette Ave, Brooklyn, New York
Mortal Engine uses a spectacular mix of space-slashing choreography and hyper technology to transform the stage into a cosmic force field. As the dancers morph into light, image, and sound, this work portrays a shimmering, ever-shifting world—never predictable and always changing.
Offer valid for all performances. May not be combined with other offers and not valid for prior purchases. Subject to handling and facility fees and availability. Maximum of 4 discounted tickets per household. Offer expires Tue, Dec 8. Use promotional code 11027.
More info, video, and tickets on the BAM page.
Become a Fan of Chunky Move on Facebook
See more dance videos of Gideon’s choreography for Chunky Move
Architect Neri Oxman is the founder of MATERIALECOLOGY, an interdisciplinary design initiative expanding the boundaries of computational form-generation and material engineering. Named one of Fast Company’s “100 Most Creative People in Business,” Oxman investigates the material and performance of nature in an effort to define form itself.
Watch 2009 video of Neri from Fast Company
Read Surface Magazine’s recent profile of Neri’s work (.pdf)
First inspired by the mysterious and mathematical qualities of a caterpillar’s crawl, artist Reuben Margolin creates large-scale kinetic sculptures that use pulleys and motors to create the complex movements and structures we see in nature. Margolin takes to the PopTech stage to share some of his extraordinary mechanical installations.
Find more videos about Reuben’s waves
Watch a MAKE.tv profile of Reuben in his studio
See where Reuben’s work has been exhibited
Editor’s note: Leetha Filderman is the Director of the PopTech Accelerator. For World AIDS day today, she gives an update on Project Masiluleke, the collaborative PopTech mobile health project. More details in these Project Masiluleke videos and look for more updates on this blog in coming months.
Project Masiluleke, a signature program of the PopTech Accelerator, has been sending HIV/AIDS awareness messaging in South Africa since October 1, 2008. Designed as a large-scale mobile health initiative, the project has been making steady strides since its launch at PopTech 2008.
Today, and every day, the project sends about 1 million Please Call Messages (PCMs) throughout South Africa, directing citizens to the National AIDS Helpline for advice, support, counseling and referral to HIV/AIDS services in their community.
In partnership with African-based mobile service provider, MTN, Project Masiluleke has tagged 329,362,518 PCMs since its launch at PopTech 2008. These PCMs have been instrumental in driving over 1.2 Million calls to the National Aids Helpline over the past 13 months.
In addition to the “call to action” PCM phase of Project Masiluleke, we are expanding TxtAlert, a text message-based appointment reminder system that reminds patients of clinic appointments and other types of treatment reminders. Based on the early success of pilot projects using Txt Alert, Edendale Hospital – one of the largest public hospitals in South Africa – will implement TxtAlert in the HIV Antiretroviral and TB clinics in the early part of next year.
While mass messaging and treatment reminders have made an impact, the AIDS epidemic continues to cause enormous suffering and premature loss of life throughout South Africa and many other parts of the world. Globally, the stigma associated with HIV/AIDS prevents millions from learning their HIV status or connecting to treatment early in the course of infection.
In the coming year, project partners will continue to actively explore and test a breakthrough distributed diagnostics model: low cost HIV self-testing backed by mobile counseling support. The concept of self-testing has been greeted with enthusiasm by the KwaZulu-Natal Department of Health, the South African HIV Clinicians Society, and other leaders in global healthcare. And the most important endorsement of our work comes from those facing the realities and challenges of AIDS on a daily basis. Feedback from focus groups of high-risk men consistently confirm that individuals are eager to have access to HIV self-test kits, prefer mobile interactions over face-to-face counseling and feel empowered by the ability to test privately. We will keep all of you posted as this work progresses!
The work of Project Masiluleke exemplifies PopTech’s commitment to creating impact through highly collaborative, cross-sector partnerships. For over three years our core partners – iTeach, Praekelt Foundation and frog design – have worked with us to explore and create innovative approaches in response to the challenges of HIV/AIDS and TB. We are also grateful for the support of MTN South Africa for extending their commitment to the Project Masiluleke for a second year.
To learn more about Project Masiluleke please visit the Project Masiluleke section of the PopTech site.