If you’re looking to learn how the worlds TOMS Shoes and Warby Parker’s are created, or thinking about creating a consumer brand committed to helping the disadvantaged, then this article is for you. We’ve compiled some serious wisdom from successful entrepreneurs who’ve grown their ventures into huge successes. We spoken to some of these entrepreneurs about the challenges they faced and the failures they encountered, to how they got on to the path to phenomenal success.
Nathan Rothstein the founder of Project Repat started with a noble cause of upcycling t-shirts into new products with an aim to reduce the environmental impact of discarded t-shirts and to create fair jobs in the US. You can read their entire story of how they got started and slowly evolved their idea unitil they achieved the right product market fit. Project Repat recently crossed a million dollars in revenue in just over a year which is far cry from just a year ago when they were struggling and going nowhere.
This is what Nathan has to say in his recent interview with Dutiee and from his writings on Lean.org about lessons learnt.
Create products that people actually want: We originally thought our customers wanted random t-shirts as tote bags and circle scarves, but we were wrong. In the early days I remember going to the local markets in Boston to sell our totes and scarves — we hardly got any sales. Our product wasn’t that great. While our totes and circle scarves weren’t selling we were constantly asked by people about what we could do with their t-shirts. What we realized was that people had strong memories attached to their t-shirts even those they didn’t want to wear any longer and were asking us for a way to preserve these memories. This is how we discovered our calling – converting people’s old t-shirts into blankets as a way to preserve memories.
Breakout from social enterprise circles and connect with consumers: When we started Project Repat we spent a lot of time in “social enterprise” circles, but quickly it became apparent that there were not enough people in the country who even knew that phrase existed to be able to run our business on philosophy alone. Even though many people in Boston were interested in our business because of the social mission, we knew we were not going to survive on that alone. As Sarah Mckinney writes, the term “social entrepreneurship” is confusing and unheard of by 99% of the population and if you are not focusing 100% on financial sustainability, you won’t end up having any economic or social impact.
Don’t get lost in the story, focus on the product and business first: Social Entrepreneurs often think that a good story around the product will carry their business forward. That people will be willing to buy their high price product just because the story is good. Project Repat started selling tote bags and scarves in the local markets of Boston and would spend effort on the story behind their products, and only after would they focus on explaining their product. They soon noticed that it took longer to sell their products and it was clearly not financially sustainable for their business.
Instead of putting the story first entrepreneurs should focus first on creating value for customer at a price that makes them competitive in a marketplace. The story behind their product should only be used as a way to share the message further.
Investors aren’t interested if you are in the business of doing good and social impact investors are hard to find: Early on we were told that there were thousands of people who wanted to invest in social enterprises, but these “social impact investors” were difficult to find. As soon as we told investors we were a social enterprise, they lost interest and referred to us as “do gooders,” a term synonymous with not making money. What we also realized is that social impact investors are not really interested in you if you do not have a few years of traction, but to get to a few years of doing business, you often need someone to invest. It’s a strange paradox. For companies between $100K -1 million revenue there is not much growth capital available in the ‘impact investing space’.
Saba Gul started BLISS two years ago to create fair wage employment for Pakistani women and girls through sale of hand embroidered handbags in the western world. She recently relaunched her startup under a new name Popinjay and went from being a nonprofit entity to a for profit business with the same goal of empowering Pakistani women. Saba in her blog post talks about what got her to modify her business model and describes some of her experiences and learnings so far in running her social good startup. I’ve been familiar with Saba’s work from the start, we’ve written about her on Dutiee when they first started and I remember her talk at the SOCAP 2011 at the opening plenary where she introduced her venture and the product to a packed room of interested folks and investors.
Despite a great start Saba had difficulty in scaling her venture, she was unable to raise money, her product wasn’t selling and she was almost on the verge of running out of cash. The changes she made recently in the structure of her startup and the way they functioned showed instant results – increased sales and backing of right investors. With the money coming in she is now able to employ 120 women, a tripling of growth in the number of women from their launch and each woman earning 2 to 3 times what she had been making with BLISS.
So what did Saba learn over these two years that lead to such dramatic change? You can read in full details her learnings in her post, but in nutshell this is what she says:
To scale social impact requires scaling sales: Popinjay was in one of the most fiercely competitive industries in the world — the fashion industry. Their competitors were giant designer labels and large corporations. Social conscious does not lead the majority of purchasing decisions. They needed to evolve into a serious fashion label themselves with a focus on high quality products and not just be a non-profit focused solely on social impact. Social impact was a by product of their success. It was key that they understood their customers — they dreams, aspirations, hopes and fears, they needed to get into their head to understand how they made their purchase decisions.
Scaling sales requires creating a brand: A brand is a promise — of quality, of consistency, of authenticity. What they had earlier created was a beautiful product with a compelling story, but it was not yet a brand. To build the brand they did four things.
1. Turn early customers into an army of brand ambassadors, they became your eyes and ears in their cities, telling the story of your brand and pulling in more customers.
2. Put processes in place that enabled you to deliver on your promise to customers and earn their trust and loyalty.
3. Deliver quality every single time, get people on your team that understand logistics, pricing, reliable manufacturing and distribution partners. These were things that they as a non-profit had not focused on.
4. Changed the company’s name to resonate with our customers and represent a global fashion label, instead branding it like a non-profit.
To live the part of the CEO of a fashion label: At the non-profit the focus was on identifying the right girls and women to join our program, visiting the villages, facilitating the training and quality control, forming NGO partnerships. But for us to scale, Saba had to turn into a sales powerhouse — selling the vision, the products, and the company— to potential hires, customers, and investors along with attending trade shows, leading design and closing sales deals.
“Being a social entrepreneur is tough. You have all the challenges of a regular entrepreneur and more. You can’t play on the fact that you are in the social sector and have a mediocre website and talent. You have to provide the same kind of experience to people that they are use to getting especially if you are on the web. Remember that you are trying to get people to do something they usually don’t do, so give them the best possible experience, right from your first sign-up form to your thank you note”
There is lots of wisdom to be found here in the words of these entrepreneurs but one point they all repeatedly make is – your product has to be great and something that people would want to buy. The market is fierce and highly competitive, if you do not offer the same or better experience than the other brands then you won’t last for too long. The market won’t be kind just because you’re in the business of doing good.