"Occupy Business School: The Art of Social Enterprise Creation"
Report and Presentation Notes from the Classes at Free University NYC, September 2012
This weekend was a breakthrough experience.
I had this insight: visualize the next Mark Zuckerberg being one of us. He's currently worth $12 billion. What if he was an occupier, who had been trained in the art of wealth creation under the rubric of a radical entrepreneur's school? This is what will happen in the future: The Occupy Business School will train 30-40 radical entrepreneurs a year. We will create kick-ass, world-changing enterprises, but also give back to the movement. The Occupy movement has the ideas, and the passion, it lacks capital. That's where we come in.
Yes, it's clearly a huge contradiction to be an activist, an occupier, and an entrepreneur, seeking to teach a grassroots movement the art of seducing capital and raising funds for community-empowering social ventures. Yet everyone I ran into this weekend seemed to get it.
My three "Occupy Business School" classes this weekend were well attended, and I met people who were sincere, bright, and gifted. Together, I really think we can build this thing into a powerful force.
I am going to refine the order of a few things, and flesh out the presentation, as I go here. So what you are reading is really the latest version of the presentation itself.
As the classes evolved, I strove to make the presentation more "horizontal" and democratic, and less of a traditional "lecture." So, on Saturday, we went around the circle. People introduced themselves, and explained why they were there. I learned who the group was. Many people were already running radical social ventures: a silk-screen operation, a hypno-therapy center, a factory in the Bronx, etc. We were all interested in integrating the skills of small business management with the art of social change. Some people were just observing, or dreaming, or scheming.
Originally, the intro was a stab at the "cronyist capitalist" empire we are trying to change as fast as possible. The Goldman Sachs cover-up culture, the secrecy, the political control, where both parties are behind the bailouts, and there's no political representation for the 99%, etc. Five years into the Great Recession, we are still suffering acutely from hard unemployment. The current rate is 8%, but "Real Unemployment" is far great, probably three times that.
Which is a great context in which to say:
I. This Class is the Direct Anti-Dote to Unemployment, Using Radical Methods.
Occupy Business School is a Do-It-Yourself method, a solution to the lack of jobs, and the deadly lack of good jobs we can believe in. For those who say this is a dangerous dalliance with capitalist methods, I would say, yes, maybe. But I prefer to think of it as "revolutionizing the revolution." Rather than engage in the mental fantasy of a revolution based on violence, let's face the facts. That kind of revolution requires continued violence to protect the revolution against counter-revolution. The grand passion of 1917 creates the KGB and Stalin. A more enlightened, almost Zen method would be to forsake the clingy, seizure of power, and create a different kind of life-sharing, community-centric empowerment outside the Marxist/Imperialist debate.
Rather than think of money, capital, entrepreneurship as a wolf that needs to be tracked to its cave and beaten to death, the role of the social entrepreneur is to think of money as a fox. Our role is to lure the fox out of its hole. Money wants to be invested, and if we can over-come our many resentments against the world of money, we can give a place for investment capital in the changing of the world. In fact, this is a good time to re-examine our thoughts on the whole nature of money.
II. The Nature of Money
On my recent 55 city book tour, one particularly stark example popped out that showed our pre-conceptions about money. Activists in California were meeting to discuss possibly using a new local currency in their city. But the leader of the meeting said that, among the new rules, the new local currency, would not be allowed to be lent, or invested. Money, in her view, should not be allowed to make money on itself, by itself. That is "lazy."
It's also forfeiting the game before you start.
Money is not invested out of greed. Money is invested in order to live. The rate of inflation will devalue money over time if it's not invested somewhere. This acts to our advantage. The social enterprise creator is not only setting up a place for investment capital to go, but a place that is cool, green, and interesting. You get what you attract. I know we have all had mixed experiences with money, but if you limit your reality to one based on your resentments, your life becomes toxic. So, it's in the nature of money to want to grow, and its in the nature of people to be generous. Out of these two truths comes a new paradigm: the fair trade certified businesses, the "triple-bottom-line" companies, dedicated to "people, planet, and profit."
III. The Spiritual Laws of Social Enterprise Creation
Over the course of the weekend, I developed a list of Axioms of Universal Spirituality necessary for social enterprise creation. Well maybe "necessary" is a bit domineering, but hey they sure work for me. Let's try to discuss these here, in the wake of our discussion on the nature of money.
Note first, through, that in the same way here that we are no longer talking about capitalism as we know it, this is a spirituality light years away from the feudal God of "power and might" or a Church that thrives on patriarchy and secrets. Rather, this is a spirituality in keeping with all the Buddhas of history, all saints of all religions, the raw Jesus and his radical mentor, Mother Mary.
1. We have infinite creativity. We all have a mission. We all deserve a job, but more than that - we deserve work that enlivens our spirit and makes use of our gifts. We are all good investments. We all need to work on the articulation of our purpose. This is art, and it's a work of literature.
2. Work that is challenging, and fun, and life-giving is the opposite of work that is soul-crushing. My original business mentor, Stuart Bagwell had a few axioms for living. One of "Bagwell's Axioms" is "Never work a job you hate." A more positive way of phrasing this is: We thrive when we do what we believe in.
3. You get what you give. Anger is a cup of poison. If you give anger, you get anger back. The cause of anger is often righteous, but the rage it produces is a flailing waste of energy. Better to withdraw, empty yourself of the world, or your own ego and mind, and work in a new direction.
4. If you want to help yourself, help others. Give a gift daily, as t Deepak Chopra says in the "Seven Laws of Spiritual Success." It seems like all the spiritual traditions, all the religions, point that we are made to love, not to hoard, lie and make war. This is a huge global truth. It's is a solid economic indicator for the Social Entreprise Creator in the market for capital.
5. Spirituality is a form of radical critique. The human mind is both a source of infinite creativity (aka God) but also an illusion generator. Spirituality is the process of recognizing what is illusion, and then taking steps away from that illusion. Recognizing the process is happening is as important as the process itself.
So, in that case of the California currency activist, these four spiritual axioms would be foreign to her. Her anger was guiding her, not her infinite creativity, her generosity, or her spirit.
This Free University weekend was insightful because I often came back to the theme that what we are talking about here is not academic at all. It's not theoretical, nor is it cerebral. It's a daily practice. It's turning work into a form of meditation.
Even if you are a strident Marxist or ardent anarchist, or bitter postmodernist, or whatever, once the spiritual truths above become apparent, broad revolutionary possibilities emerge. Remember, we are seeking to revolutionize the revolution. Nonviolence and Gandhian "truth-force" is the hard road, but it's in the end more fruitful. It's more difficult to sow seeds and cultivate than to pull up life from the soil. But we are dealing here in the realm of creating jobs, economic life, unleashing creativity, and engaging in the process of good old "doing" rather than mere critiquing.
Practicing these spiritual truths, and going beyond anger and resentments leads to a huge paradigm shift. In time, it's possible for radicals to see something as huge as the stock market not as this terrible monster, but a place where the people who have created cool ventures and many jobs get some love back for all the love they have given. An "IPO" or an "initial public offering" is an explosive event where the original founders and original investors in a venture get to finally see some liquid energy for all the hard work and suffering they have put it. And remember, the model I am describing in this presentation presumes that we are no longer talking about capitalism as we know it. The wealth I am talking about generating will be contractually obligated to be "paid forward." Imagine the 30-40 new Mark Zuckerbergs who we create, paying back one half of the $12 billion they create, to the movement for peace, truth and transparency. Or imagine them paying it forward and starting Occupy Business Schools of their own. One to two to four to sixteen. This is the rate of revolutionary wealth sharing and social venture seeding I am talking about. One Johnny Appleseed starts two who start four who start sixteen Johnny Applesseds. The revolutionary possibilities here are intense. What is 16 squared? 256. Square that, and you have 65, 536. Imagine 65, 536 new social enterprise creators creating jobs, creating meaningful work, creating wealth, and paying it forward.
In the original draft of the presentation I made reference to "valuation" a number of times, but I am going to give it it's own section here. The presentation at this point begins to build Social Enterprise models, and business plans. In the live version, we are getting closer to the more interactive part of the presentation, with the group. We have laid out some spiritual and philosophical foundations and now we can build the house.
But there's something I want to say about valuation first. Valuation is itself a powerful tool, and it's also something of a spiritual principle, too, in a way, ha ha! What we are talking about here is the value that the owners of a venture set on the venture. So if you have started a fair trade coffee house business, and want to sell 0.1 % of it to the best friend of your rich aunt, you have to first figure out what 100% of it is worth. That's valuation.
It becomes even more important if you are seeking larger investment. Let's say the coffee business has been viable and profitable for a couple years, and you are ready for a major venture capital investment. The VC people will want 49% of the business, for a valuation that will be lower than what you the owner set. That's natural. A middle ground has to be found.
In your favor is the "multiple." It's a form of magic in valuations, quite frankly. Yet, it's used all the time in business. One traditional way to value a business is by its yearly revenue. Let's say the coffee business is doing $500K a year. That would be what that company is worth: $500,000. At least, in the old model. The multiple works in the favor of the Social Enterprise Creator. If a venture is about to grow, or, let's say, it's on the verge of being able to be franchised, then the valuation would be $500K times a multiple of seven! It may sound arbitrary, but seven is the traditionatl multiple on businesses about to franchise. And that means that your $500K coffeehouse business could be said to be worth $3.5 million. At least.
Valuation is very exciting. It's a mix of subjective and objective factors, there is plenty of old fashioned accounting here, and plenty of emotional, touchy-feely, "brand" and "customer experience" factors swirled into the mix. I never really "got" the basics of valuation until I was running Vox Pop, my second company.
Creating a social enterprise means creating value. You are helping a community, and creating good jobs. The founders often don't get paid in the first couple of years. But what that social enterprise is doing is making itself more valuable, the more it grows. So the founders, and all workers who are owners, own something that is going up in value. How you express that is called valuation. Harnessing the energy of valuation is a powerful tool, it's the Philosopher's Stone of social enterprise creation.
V. Politics, Art and Literature
Social Enterprise Creation is a new form of artwork. A well run business is a three dimensional installation, an organic machine, a living sculpture, using reality as the medium.
Any political concerns can be incorporated into the practice itself. There is no limit based on preconceptions of ventures or corporations that have come before. If you want it to be a union shop, write it into the bylaws. If you want a profit-sharing arrangement between all workers, write that as a procedure. It's all about what the shareholders of the entity want to create. This is the time to practice what you preach. It's time for politics to be refined in the crucible of reality.
The act of writing it out is the first step towards going from idea to reality. Start with the mission of your venture. What makes it different? What are the values, and how are they practiced? What is the manifesto? Make it big and grand, you can refine it later. Aim for the stars. A new world is at stake.
Who are your customers, and what is your philosophy about how you understand and serve their needs? What are the procedures you use on a daily basis to operate this venture?
So many things need to be written, the act of social enterprise creation is an act of literature. But literature in three dimensions.
Here's a specific example of how I made politics, art and literature a part of the venture at Vox Pop. We had a writer's group meeting every Tuesday in the cafe. I attended a couple times and suggested to them that we start a publication. Out of those meetings we started the New York Megaphone newspaper. We printed 50,000, ran deep investigative journalism on local and national stories, and provided a big opportunity for more people to know about the Vox Pop venture. Our sales went up 45% in one year.
VI. Enterprise Modeling
Speaking of art, the next part of the presentation is an interactive exercise that will visually provide great insights into the components of participants actual or future business models.
I am indebted to Shawn Cooper, a snowboarder and entrepreneur in Jackson, Wyoming, who gave me this tool while I was on my last speaking tour. He handed me his copy of "Business Model Generation" which is all about the "Business Model canvas." I.e. this:
In the same way that the left brain (logic) and the right brain (emotion) act in concert in the human person, the corporation, and the social enterprise venture, contain both. This model shows how. On the left are the foundational relationships of the enterprise model: the key partnerships, the key resources, and the key activities. In the center is the value proposition, the gift that is offered to the world. On the right, are the big emotional realties, the big love: the customer relationships, the customers themselves (described by types, or segments), and the channels of distribution. In the bottom line department, you have costs on the left, revenues on the right. Put them all together, and you have your viable organic machine, your social venture.
What you should do it print this out, get your team together with a pack of post-its and sharpies, and fill in the blanks. Blow up the model onto huge paper, or draw it out on a white board. Use post-its and sharpies to keep concepts short and sweet - one or two words.
I myself found it useful to do so for my own venture, my ideas for an alternative business school. By unpacking the venture, and examining its components, often times we think of other components that can be added. To be specific, at first I thought that only main Revenue Stream would be tuition. But as the model grew, I also added "sales of publications, subscriptions, equity in ventures we help create, head-hunter fees for talent we help to get hired.
I also found it helpful to show people the Apple iTunes business model canvas, to show how a successful business model works.
VII. Closing the Deal: Raising Money with Joy
Once you have the business model, and the acts of literature that become the business plan, you are ready to raise money.
We all know people with money. Money surrounds us. We often just haven't trained ourselves to see it.
Here are some simple steps to take to go get it.
1. Silence the VOJ. We all have a "voice of judgement" in our heads. It's a voice from our own inner hell, the voice of bad teachers, or parents in a bad mood, a voice that says "this will never work, don't try that, people will laugh at you." True artists overcome their voice of judgement. You acknowledge it when it's speaking, and you let it pass behind you.
2. Put a lot of unique energy into creating your model and your plan. To Julie at the Occupy Silk Screening project, I suggested that she and her team create a business plan that is printed using silk screens. She loved that idea.
3. Visual Art! It's your job to make it visual. Use icons, and symbols. Hire an artist, or find one in your circle. A simple ten page version of a "slide deck" is often what big investors are willing to look at, a summary of your venture, that is limited to bullet points and key information. Want a sample? Here is a PDF of a slide deck I created while head of Vox Pop.
4. Make an offer. Once you have your valuation, you have a sense of what you can offer to friends and family investors, and later, larger investors.
5. List your contacts. Write it out. Contact them. Every "no" is one step closer to a "yes." Who do they know who might be interested?
6. Close. Drive to the hoop.
VIII. Final Remarks
Having done two corporations myself, I know that it's not easy. In fact, this task is Promethean, it's titanic. It requires all you have, and more. The rate of failure is daunting, yes, but failure is also an excellent teacher. So I'm not spending too much time here on the odds.
Rather than look at what might happen, let's look at what must happen. We have a world to win, a planet to heal, a badly damaged democracy and economy that needs bright revolutionary activity. Social enterprise creation can help make that task a daily practice for you.
I asked everyone who attended this presentation to sign my contact sheet. Anyone online who has enjoyed reading this, please stay in contact with me. I will be growing the Occupy Business School network, and possibly starting an actual alternative college, called the Elias Hicks School.
The new Google Group for the Occupy Business School network is here. Stay in touch!