addict poverty by helping them develop businesses impious social ventures with steve schwartz thank you this is i'm i'm excited about this show because you know to help somebody develop a business to help them get out of poverty that's pretty cold and we really approach this not from what is it going to take to solve this most immediate problem but taking the longer view what does it mean really to be developed in one of these communities what does it mean to have people living a dignified life of means of being able to support themselves and meet their most basic needs that's about a high itself what does that mean and who is sure is the sanskrit word and it roughly translates into the idea of skilled means in and a little more broadly the idea of using skilled means to overcome a challenge to achieving a goal and so we felt that really captured the spirit of what we're trying to do is give people the kind of resources they need micro finance organization and within unitas there was a specific project that was called the ultra poor initiative and what they were really looking at was what do you do for the people who are too poor for micro finance you don't hear about it often but there's really a level of poverty where a small loan is more of a problem than it is a solution when you have folks are really struggling to meet their most basic food shelter needs taking on a loan and being expected to quickly construct a business that will allow you to repay that loan is pretty unrealistic you've got folks who are really struggling with the basics of life and it's not necessarily it's not a liquidity problem for that so they are you basically a business incubator yes yes we are in a certain sense but we're not the traditional business incubator what we do is find aspiring entrepreneurs with business ideas that can be large scale employers  communities where the need for stable and dignified work is is the highest so we'll come in work with the management team to provide them with the basic start up seed capital that they need and then our team will work closely with their team to get the business through its pilot phase and launch and started to help really scale we're going to get into some specifics of pious social ventures but i got to find out about you for trist why why would you want to do this instead of get a different type job make a lot of money and do the things that a lot of people say that we should do here in america well it's it's just sort of a basic human dignity thing i come out of a background living in west africa actually where i saw communities where what folks wanted more than anything else was to be respected as both producers and consumers and so if we can extend that globally i think we have a very good chance of getting beyond a sense of needing to give people things to help them overcome their problems and instead empowering them to take control of their lives forgive me but you know look west africa i am not west african my wife and i served together in the peace corps and been in a small west african country right on nigeria's western border what did you do there i was small enterprise development volunteer and also i worked with a lot of small trades people and help them take their businesses and professionalize and some cases scale them really a lot of time working with micro finance women self help groups and it's tremendously rewarding experience for sure and it's what led me alternately back to unitas where i met my two co founders and and so now you are deciding to take what you learned in the peace corps and what's your experience in the peace corps and really make it something that has got help a lot of people absolutely and i think the program that's designed in two thousand and eight with united is really insightful experience that started out as most ultra poor programs involve some sort of subsidy and give away and what she really discovered through the course of doing that project was that if you inverse the relationship and instead of subsidizing people on route to being a micro entrepreneur if you give them a job at the beginning then they're able to meet their most basic food and housing and education needs and and from there really support themselves on the way out of me what does alter a poor mean there's no clean and easy definition for it it's generally understood to be somebody who's living under a dollar twenty five a day then again ultra poverty really is relative to a surrounding community it's the folks who are really struggling to meet their basic needs relative to those around them the india where we work mostly in that context it's a lot of folks who are these are living on the streets or living in slums shanty towns a rural villages where they don't have the basic resources to necessarily support themselves and so they're working on construction sites hauling stone in water or working in rural settings carry working on other people's land and so it just they have no opportunity to get ahead they're really struggling to earn a very meager living that by most professional estimates comes in right around that dollar dollar twenty five a day level so water their business opportunities their business development opportunities amongst the ultra poor themselves they're very very limited i think micro finance is generally an option but as i mentioned it can be more  problem than a solution somebody would take in that credit and then spend it on food or housing and suddenly they've got debt on top of all of their other problems what we really look for are entrepreneurs who understand these communities understand the skills that are present in these communities around them and start to work with other entrepreneurs in the area to formalize businesses that can help people have an opportunity to work what we would consider a job let's talk about some of those businesses but first let's talk about your partners who are some of your partners that you were working with three partners the first was a dairy farm that was launched in august of two thousand and eleven up in the barra bunky district near pradesh it is a company that is purchasing dairy from families in the area that have their own live stock but they also purchased a herd of their own and have hired families that don't have their own livestock to keep the animals at their home care for them milk and  provide the milk back to the companies so it's a way for them to basically participate in the local dairy supply chain without actually being dairy cattle owners themselves the second is the silk weaving business up in the poor area of  har which is further east in north india and it's a really interesting traditional silk weaving community but the local market for those products is effectively broken it is layered with bureaucracy and middlemen and we really earning very little for the work they were putting in so nobody could really make a full time livelihood out of silk weaving what we've done is help of stablish a company that can not just provide that kind of organization but also market collectively the work of these farmers to large national retailers and so ok you just nailed something that i got to talk about if if people who are ultra poor all of a sudden become tremendous artisans which they may be ready they still have to have a place and a way to market their goods is that what you help happen if you help the waivers market the silk in a lot of ways yes i mean we're taking in efficient markets we're taking industries that are layered with bureaucracy and in formality and simplifying them and providing a commercial viable formal market outlet for a lot of these people's labor and going back to the silk weavers these are church silk weaving traditions that have been handed down for generations and now we're just giving people an opportunity to do that is a meaningful livelihood versus what is effectively a hobby because they can't earn a full time living out of it how do you expand the market for them so it's actually a lot of it comes down to selecting great entrepreneurial partners we will work with that founding company to make sure that their operations are formalized and sophisticated their their financial management is of the same level we do spend a lot of time working with them on their marketing and sales effort so really professionalizing that organization in a way that they're confident enough to go to in this case fab india one of the large national retailers and say you know we can easily fill a an order of twenty five thousand scarves if that's what you need so is there a potential for export there is definitely a potential for export you know india is a unique market in that it also the domestic demand is massive and so export is not the immediate first step for a lot of our partners but it's certainly something we consider let's go back to the dairy cheese any other butter it's primarily milk and butter in india that's being produced via this i mean right now we're really focused on that first step in the supply just the production and collection of the milk in this case the company then is a wholesaler off to a retailer which is going to either package it for a retail sale or convert it into products like like milk an ice cream or butter nice cream they can't imagine that that would be anything that would be exported so that really is it's you know the fun part about having the soak weavers as our second partner was that we finally had something we could bring back to the u s and show people because the milk did not transport so well they have a third partner right we do it's a  company that is working in delhi and what they do is recruit slum dwellers skilled them up on the basics of facilities management and then places them in office complexes to work as your staff and service staff you know a lot of the property management aspect and it's providing people that viable channel a legitimate channel to move into those roles where is right now it's all done extremely informally and it's once they are placed in those facilit es the company also ensures that they they are receiving their full wages they have health care that they're receiving certain protections and being avoiding exploitation so the recruiting of people to work and these offices let's say that recruiting is done extremely informally what do you mean by informally you know right now a lot of it is taking place word of mouth you have people who will say you know we need three janitors for this office building and so we're going to go call my cousin who's has another friend who's got a connection to somebody who's working in a slum and we're going to go find three people and hire them and pay them you know erratic leaf sadly it's very rare are the stories of that system not causing problems for the people in it so what i'm hearing though is that they were recruiting informally as a way that's probably been done for a long long long time so basically there's a there's a cultural aspect to it here going in and changing culture we are and we aren't really our partners up and they are of these communities and so we are much less of a disruptive force this is not the foreign organization come in coming in it's really the local business that is going in and as part of their model trying to bring formality into the system so it's not necessarily while it is disruptive it's not necessarily problematic in the way that one might expect if we were coming in a group of pure foreigners and saying you know what you're doing things wrong you should do it this other way is there any kind of element inside the areas where you work that don't want you to succeed you know we you know we have not run into anything dramatic we do have regular conversations with local politicians usually that's via the partners again one of the things we look for is making sure that they're in good standing in the communities and that they have the kind of relationships necessary but we're really coming in without a political agenda we don't have any sort of other cultural agenda it's really just about empowering people who live in these communities who care about these communities to establish businesses that can help improve the lives of people in them so they're very much of the area is this a chicken egg question which comes first recruiting the people who are ultra poor or reputing recruiting the farmer you know it's kind of it is a very good chicken and egg question i think for the most part we focus on finding the entrepreneur first and a large part of what we look for in our selection process is that they have good relationships in these ultra poor communities and can quickly do the kind of recruiting they need to get their business up and running and you know i can i can hear people who are watching right now that are there want me to ask this question  you recruit the the farmer the entrepreneur first who doesn't necessarily have to be a farmer why do they need you so this is one of the other big challenges in this market there is a tremendous gap in which seed funding is just not available for entrepreneurs and that's a big piece of the model is we're not necessarily looking for entrepreneurs who may be on the business plan circuit they may not be winning a lot of competitions and they may not have the kind of businesses that capture the imagination of venture capitalists instead a lot of time what you're looking at are commodity businesses you're looking at sort of standard older industries where there hasn't been a lot of emphasis placed on them yet they've proven time and again an ability to be profitable and provide a dignified living for the people who are a part of those supply chains so we come in and we're providing funding within that roughly fifteen thousand two hundred thousand dollars band impious specifically we  focus on about a twenty five the seventy five thousand dollars range and that is well above what a micro finance institution could provide and far below what a traditional venture capitalists or even angel investors could do what do you want to return what we want to jobs that's our number one priority we do our funding as investments but it's really for two purposes one is to a sense of discipline in the partner so that they're thinking about us not just as an investor but their potential future funders in that investment context the other thing that's really advantageous is should that business be successful there will be a return to but those returns are exclusively restricted for reinvestment in future businesses so if we do our work right we create a virtuous cycle where that money is going into not just the dairy but it could be going into a weaving business it could be going into a service business and continue to cycle through the local economy and you guys are n g o s right yes we are we're a nonprofit five forty three five one c three here sound more like an impact investor you know we i think the easiest way to put it is same team different position a lot of what we run into are a lot of what the entrepreneurs run into the impact investors just by the basic  math of venture fund management they need to be able to deploy a certain amount of capital with a certain level of efficiency so they can't carry a lot of staff and they need to make larger investments and because of that they also can't afford to not have a return and so they're there's more risk aversion in in that equation for us because we're a nonprofit because we're working with philanthropic dollars so we start with these businesses at a point where they're quite literally sometimes an idea on a cocktail napkin and the idea that you know we can spend a few weeks with the entrepreneur start to flesh out the business idea and then if there's really something there we can put a little bit of money behind that to start to launch a pilot that is a level of risk in that event or from just simply could take we also are allowed to maintain a larger staff than a typical impact investor and as such are able to spend more time working with the entrepreneur to make sure that they have the full bundle of skills and resources available to them to encounter any challenge they're going to come across we're very fortunate to be talking with steve short so is the director of strategy for impious social ventures very interesting organization that helps those who are all trip or develop businesses see what is the director of strategy and a lot of ways i really oversee the u s side of the organization are two other co founders saatchi is the executive director and she really splits her time between the work here and the program's work in india and overseeing the india team's work there and then our third cofounder was in based in bangalore and he was the director of business development i do use past tense because he's since moved on but we've expanded the team there we now have a team of four in india that are playing that role of being the everyday face of the work with our partners i'm seeing recruiting that you do in two places want to we're recruiting the abject poor in the old report and the other is recruiting partners  we've talked a little bit already about recruiting the ultra poor so steve just what does it take to be a partner with a pious social mentors it's really a combination of a couple of things one thing probably more than anything else is just being somebody who understands the communities and understands the industries that you're working in to a depth where you legitimately could do and doing that work and we look at it as we have the team that can come in and provide some of the more portable skills something like the financial planning of the operational planning or the marketing strategy development but we really want people who understand the communities and understand the industries that were working it what i was going to ask is is how do you know who understands you know  the local business we spend a lot of time with these entrepreneur the relationships are cultivated over several months even just in the inner dr you face so a lot of the entrepreneurs we looking at we're looking at are off the beaten path they're not as i mentioned earlier the ones who are going to be grabbing headlines at competitions but instead are the kind of folks who are in second and third tier cities maybe a lot of them are working in the ngo sector at this point are working in other businesses and really just have an idea that might be able to create change in the way we're looking to do so they will come to us or through networks we will get in touch with them and then it just starts a conversation what's in it for them what's the opportunity to start a business i mean it's certainly not everybody is an entrepreneur but the certainly is a good segment of the population that is and so you have aspirational individuals so the partner will or a potential partner will come to you and say you know hey we hear that you have a supply of of laborers and the ultra poor and we want to partner with them to do what it's a little different from that so i'll go back to the dairy example the entrepreneur came to us and said you know listen i understand who to pradesh is the dairy belt of india it's widely understood to be the one of the most productive  dairy production areas in the entire country but the market is completely informal or there's a handful of actors but they've really not ventured outside the large cities i understand that if i can get livestock into communities where you have folks who are not currently livestock owners so one of the partners get out of it they get the opportunity to start their own businesses i mean there is certainly a class of individual who really is interested in being an entrepreneur and it's a chance for them to take this industry that they understand and a community that they're very much a part of and find in a way to start a business that can be a permanent fixture in that community so we're really and a partner in an advocate as they're starting that business up so it sounds like a holistic solution where you're helping the entrepreneur you're helping the abject poor you're putting it together and then growing together absolutely in holistic is a great word for it going back to the dairy farm as an example what happened there was the entrepreneur came to us in the dairy belt of pradesh area fully understood that it was an area where dairy was a very common thing but the supply chains were were fairly informal and he understood that if he could go into communities where you know there was split between people who own livestock and who didn't not only could he buy milk from the people who r t own their own animals and provide them with additional services and access to quality feed but if he had his own herd then he could also work with the families that didn't have livestock of their own and have them rear his cattle and provide milk back to him and in the process they personally benefit as well and over time they come to own their livestock so not only is it really helping the poor but it's also really good for his business because he's fortifying his supply chain of after a few years that whole village is going to have have cattle and be selling to him what are the two biggest barriers to success for a pious social enters we really run into two major barriers one here and one in india the one here is really on the funding side there is sort of a sense that nonprofit dollars are supposed to go for charitable endeavors and it should be a one way flow of money and the other side you've got investors who think that everything should be should have a return attached to it and we do fall somewhere in the middle and we are using impact investment tools to run a very efficient nonprofit program but we don't meet me fall into either camp the other thing we run into in india is overcoming a lot of the cultural barriers and entrenched interests that stand in the way of us being the economics of this kind of activity in the favor of the poor you know you have as we mentioned there's a lot of middlemen in these industries and they're not all adversarial and in fact some of the companies we work with have actually hired individuals who had been those informal middle market brokers to actually be part of the for formal company but we do run into some resistance where we're trying to in some ways play a disruptive role in the in a local economy what's the lift up project lift up is the term we use for this incubator program we've been talking about of high actually does two main things through its work one is obviously were work with these startup companies provide them with the seed funding and the technical support to get the business off the ground the other is actually a working with existing companies and helping them expand their supply lines down into these poor communities so for example we worked another dairy company in south india that was experimenting with ways of doing something that was somewhat similar to what we were doing in the north with a startup but this was a company that already had fifteen thousand farmers in its network so we feel like we're taking both a bottoms up and tops down than have nothing going on in that gap is there a stereotypical culture of poor person you know i think there is a cliche culture poor person i think the idea of somebody who is malnourished and flies on their eyes really just unable to quite frankly move tends to be what we categorize as well to it but i think that's really disingenuous what you actually find more often than not is just really good  hardworking families that are doing whatever they can to survive i mean in most cases they did not the circumstances that led them to ultra poverty were environmental it was nothing really inherent in these individuals that were there was no catastrophe that put them in the situation it was just the structure that they were born into and so i think you know you find families that really don't look all that different than others you might find you know here or elsewhere in india really anywhere in the world parents who want better for their kids families that are really make want to make sure that education is a big part of their future and i think this is one of the things that i've been really surprised with with the more we work in india is how much education is valued and so if we can work with an entrepreneur and provide those jobs one of the things we've actually seen is families are able to keep their children in school much longer because they don't have to pull them out to work something that has been as consistent as anything else more consistent actually says we started right makers was that if there is a program that involves work and consistency and saving and commitment to family it's been a woman that it was doing it and not a man is that what you find to absolutely while we are not specifically targeting women with every business we work with we have noticed that a lot of the opportunity rests with the fact that half of the population may not be a part of the workforce and so if we can find ways to bring women in in a way that is culturally appropriate we certainly see a lot of potential to improve economic activity there i can give you an example if you'd like the dairy farm again the vast majority of the employees are actually women and when we first started the concept the entrepreneur came to us with was a central dairy farm where women would leave the house and come to the central area and built the cattle every day there was a lot of resistance from their husbands of the idea of these women going away for a few hours in the morning in a few hours in the afternoon to go to the dairy what that was what ultimately led us to go to the distributed model where the cattle actually rest with the family at their home not only did it alleviate that cultural barrier that was we were encountering some resistance but also it actually gave it the whole family a chance to be a part of the success and so we suddenly had a whole family buy in rather than the woman really disrupting the flow of the household fantastic all right stay where we come down to the end of the show and let's say that we were to come back here in five years and i want to ask you this question you know how to do what he has a i'd love to tell you it was wildly successful i'd love to tell you that we're looking at tens of thousands of jobs that have been created i think i'd love to be able to sit here and tell you that we've got several businesses that we've helped incubator that are overlapping in certain communities where the mother might be working as a dairy farmer in the father might be working as a sole weaver and the children have been kept in school all the way through graduation because both parents were able to participate meaningfully in the local economy that sounds good we'll see you in five years if not before sounds great that's been steve swartz from a pious social ventures was he an ex time right here take care