Corporate Social Responsibility

Today I ventured out to Boston College to have a meeting with Phil Mirvis, a fellow at the Boston College Center for Corporate Citizenship.  You may query, what is the Center for Corporate Citizenship? It is a center for Corporate Social Responsibility (CSR), or in other words, businesses being aware of how their actions affect society and taking responsibility for their impact on the world.  When I worked with microfinance firms, CSR was always a big issue.  Increasingly, it is becoming mandatory for companies, especially large ones, to demonstrate that they are complying by what a society deems good.  For example, Nike employing child laborers (bad).  Nike supporting education and labor friendly programs (good). 

After talking with Phil and reading some of the center's info, I was especially interested in the Center's stages for Corporate Citizenship.  The stages are a useful resource to pinpoint where a corporation lies on the spectrum of CSR.  It ranges from a company being elementary (firms abiding by the more basic requirements of social responsibility dictated by law) to transforming (firms creating social change through new and visionary policies).  In this age, where an enormous amount of information is available to individuals, a large business can not afford to ignore CSR.  I think back to this summer, when every week we learned that products made in China contained hazardous materials.  Milk and chocolate containing melamine, toy engines covered in lead.  The news of these events spiraled the world an ultimately hurt the bottom line of all the companies involved.  I give the Center kudos for helping to influence corporations to acknowledge CSR and creating change with the help of business leaders.

Cape Wind

I was stopped on the street today by one of the Greenpeace peoples.  I have always made it a policy to listen to what they have to say as long as they are willing to walk in the direction I am going.  Christine, an advocate for the organization, was more than happy to oblige.  She began by discussing the Cape Wind project and I was happy to learn that the initiative had been finally passed.  

It has been a legal battle for Cape Wind to get approval to set up the offshore wind farm in the middle of Buzzards Bay, and it has been a bitter battle to set up the turbines that has pitted neighbor against neighbor, brother against sister and Mother against son. 

I personally feel proud that Massachusetts is taking the lead in developing alternative forms of energy.  One of the main arguments against the wind farms has been that they would be an eyesore on the horizon. However, I have seen wind farms in California, Hawaii and Europe, and have found that they add beauty to  the environment.  Wind farms epitomize co-existence between Man and the Earth.  They demonstrate how our development as a species need not be detrimental.  

Furthermore, people visit Cape Cod for the natural beauty of the environment.  However, it is hypocritical for residences to oppose the wind farm when currently the Cape get its power from an antiquated coal power plant! 

Venture Capital Panel

This evening I went to panel discussion held at the Vilna Shul entitled: "Boston-area Venture Capital (VC): Looking Back on 2008 and Looking Forward to 2009". The panel had three representatives from the venture capital industry.  The most interesting nugget I extrapolated from the talk is that there will be huge changes in the VC industry.  As one of the speakers noted, the industry is facing a myriad of issues which include decreasing valuations, fewer big deals and a flight of capital. One of the most frightening problems is that many of the VC’s acquired companies at their peak valuation and since the market downturn, it is going to be a long time before these firms can be sold at for a reasonable return.

Venture capitalists are like Microfinance institutions for the US.  If you are an entrepreneur in Boston and have a good idea, you will not go to a bank to get funding; you will go to a VC. VCs are one of the reasons of why entrepreneurship in the US really pays off.  VCs have millions of dollars at their disposal and look for the next big idea for investment. I will say that the structures of Venture Capitalist firms vs MFIs are very different; additionally, the purpose for investing is dissimilar, but VCs offer a path by which entrepreneurs can quickly expand and grow.

I do have qualms with how VCs operate, and I have seen first hand how cutthroat VCs can be in business deals, but I do have an admiration (and a slight bit of envy) for their work. It will be very interesting to see how the VC industry adapts to the recession.  As my friend Sanjeev pointed out, for a long time, VCs expected ridiculously high returns from businesses (think 40x their original investment) and often they only went after the sexy or in style businesses (web 2.0 or internet bubble startups).  Now that the upward trend has ended, I wonder if a more rational and realistic approach will be taken to finding suitable VC targets.

Stimulus Package for the Developing World

Although Americans are currently focused on our own economic stimulus, we should also start thinking about an economic stimulus for the developing world.  The reality is that the current economic downturn is affecting the entire world.  As economic activity decreases, demand is dropping around the world for a whole range of products.  We have already seen oil drop from a record high of USD 140 per barrel down to USD 50 (I still can’t believe that I saw a gas station offering $1.50 per gallon!).  Whole industries are seeing the bottom collapse from under them. Even China has seen its manufacturing drop significantly.

The prices of products ranging from steel to agricultural products have all been dropping.  While the US has the privilege of being the money press of the world, with the ability to sell treasury notes at any time to raise funds, smaller countries do not have that ability.  Resource exporting dependent nations, will soon see a large drop in revenues.  This drop will have a reverberating effect through the economies of these countries, leading to large spike in poverty.  We need to be aware, that whatever economic stimulus is put into place needs to have a place for the rest of the world.  If this economic downturn demonstrates anything, it is that we are an interconnected world, whose economies depend upon each other.  I hope that President-elect Obama is considering this as he formulates the US’s economic stimulus.

How many Micro-entrepreneurs can there really be?

It is a interesting question considering that the main goal of many microfinance organizations is to alleviate poverty by inspiring a generation of entrepreneurs.  Does everyone want to be an entrepreneur? I don’t think so.  In the US, where a person certainly has more opportunities to become an entrepreneur because of the ease of obtaining credit, lack of bureaucracy and market friendly policies, is there a strong urge for entrepreneurship?  A small cursory search of google revealed that there were only 22,659,000 small businesses in the US. That is only 7.5% of the entire population. Are developing countries better cauldrons for future entrepreneurs than the US? I understand the issue is much more complex, but does every Joe or Jane in X developing countries have a burning aspiration to become an entrepreneur?  Microfinance certainly provides tremendous opportunities for those willing to take the risk to start or operate their own business; however, I don’t think those individuals should be the sole focus.  It is very promising to see that microfinance is expanding into other financial sectors such as mortgages, agricultural and medical loans.

Noah Walcutt

It has been a long holiday break, but the Peoplesinbetween is back!  To start off the new year, I would to share a link to my brother’s blog.  Noah, a recent graduate from Vanderbilt University, won an art scholarship that has allowed him to travel the world and explore the many avenues of his creativity. He has traveled from the Burning Man art festival to New Zealand to Thailand. He is currently in Cambodia, near Angkor Wat. I suggest perusing his pictures and checking out some of the videos he has made.