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The world’s leading problems today will take more than just government efforts to be eliminated. Jens Molbak believes that efficient solutions can be crafted through tri-sector innovation. Joining Corinna Bellizzi, the Founder of NewImpact explains how bringing the private, social, and public sectors together can help shape a better future. He breaks down what it takes for companies and organizations to act hand in hand and address issues about the environment, economy, and human society. Jens also discusses how the tri-sector approach can lead to market equity and inclusivity.
About Jens Molbak
Jens is the Founder of NewImpact, a humanity benefit nonprofit that seeks to utilize a data-driven “tri-sector” approach to align the resources available in the private, social, and public sectors to generate superior societal and financial outcomes. He is passionate about entrepreneurship and innovation investing, and thus dedicates himself to building a world where social and economic progress is available to all.
Guest LinkedIn: https://www.linkedin.com/company/36168408/admin/
Guest Website: https://www.newimpact.care
Guest Social [if applicable]: https://www.facebook.com/NewImpactcare-100903475801448, https://twitter.com/NewImpact_, https://instagram.com/newimpact.care
Additional Resources: https://www.coinstar.com/
0:00 – Introduction
3:01 – Tri-sector Approach
6:47 – Coinstar
18:40 – Accelerating the innovation
25:34 – Business Model Canvas (BMC)
34:19 – Pushing for equity and inclusivity
38:49 – Algae, cows, and yogurt
41:46 – Uniting companies in tri-sector innovation
44:33 – Addressing homelessness, food insecurity, etc.
53:56 – Social activism
59:30 – Final Words
1:01:08 – Conclusion
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Jens Molbak On Building A Better World Through Tri-Sector Innovation
Have you ever wondered why we as a country are so committed to endless growth, methods of business building that are extractive, incremental profits, and optimized results, all while whittling down the little guy and capturing more wealth for the top 1%? To escape that cycle, we are going to have to do a little hard work to democratize access to things like funding, normalize some wages, reduce pay gaps, and a whole lot more. To unravel this story, I am joined by an amazing individual, Jens Molbak.
Jens has a passion for entrepreneurship, innovation, and investing. He seeks to create a world where social and economic progress is available to all people. He is the Founder of NewImpact, a humanity-benefit nonprofit. That language is something we will get more into. It seeks to utilize a data-driven tri-sector approach to aligning the resources available and the private, social, and public sectors to generate superior societal and financial outcomes.
Jens first learned the potential for tri-sector solutions when he founded Coinstar in 1990. You might have seen their machines in a local grocery store. That company simultaneously benefited the private, public, and nonprofit sectors. He holds an MBA from Stanford University and a BA from Yale University. Jens, welcome to the show.
Corinna, it’s nice to be here.
We have spent a fair amount of time on this show, particularly talking about the triple bottom line, people, profit, and planet and getting them on the same scale or even going into what it is to be a B Corp. I’ve even dug into circular economies, donut economies, and building regenerative businesses, but I hadn’t heard of this term tri-sector approach before I met you. Why don’t we start there? What is a tri-sector approach?
It’s a field that we’re pioneering and trying to get names. It’s similar to design thinking or human-centered design. We certainly think that tri-sector thinking and, importantly, tri-sector business models can be phenomenally important for driving the progress that we want to see, whether that’s environmental issues, social issues, or economic issues. Before I dive in, I’m excited because I love the name of your show. When I created NewImpact, which is a 501(c)(3), I didn’t pick a .org. We’re a .care. We’re NewImpact.care. Fundamentally, if we’re going to drive the change that we want to see in the world, it comes from people caring. Caring is the root of everything that drives progress going forward.
I’ve often wanted to use a .life when it comes to supplements companies because you’re building a product for a better life. As these terms start to gain more traction, it enables us to have those shorter URLs. One day, I wanted to do CMBB.com, but that was going to cost me $20,000 if I wanted to capture that.
Let me start with the basics about what we mean by the term tri-sector. I’ll use an example from my day because we all live in what we call the tri-sector world. The economy is broken out into three basic groups. We have four profit companies, which is about 80% of the economy, at least in the US, and then we have governments. That’s the public sector funded by taxes. That might be a city, county, state, local, district, or federal government. That’s all the public sector.
In the social sector, we mean the nonprofit world. A lot of people in the nonprofit world don’t want to be about what they’re not, which is not-for-profit. They’re often not being referred to as social sector entities. Those are the resources that we have. The playing field that we have to work in to try to make things happen is these three sectors. We all live in them every day.
For instance, I woke up in my house, which was built by a private-sector contractor. I took a shower and had public sector water, for which I was quite grateful. I had a clean cup of water and then a cup of coffee, which had been certified fair trade by a nonprofit organization. I hadn’t even left my house and I was already having a tri-sector day. When you step back and think about how we all move through the world, whether you’re on public transportation or a road or using the internet, which the government created, it’s amazing how we’re surrounded by these three sectors in a very integrated way.
Yet when we think about building our organizations, we don’t use this same lens. I have a deep background in the private sector. What I’ve found is that if you start to think about a whole-of-society approach, you can create stronger business models where profit and purpose are not in conflict and even stronger models in the social sector and the public sector. Those are the basics of tri-sector. There are three sectors of the economy. We were pioneering different ways to think about how companies, in particular, build themselves to get to where we all want to get collectively.
As I perused your website, I saw a simple thin diagram, which people could picture in their minds of having the private, the public, and the social. That sweet spot in the middle is what you’re talking about. I was hoping that you might be able to share with us an example. Perhaps we would dive into what you did with Coinstar, for example, to commence this conversation so people can visualize it.
Coinstar is a great example. It’s the one that I know the best. It’s the company that I started. Let me put a couple of pieces in place before I describe what we did at Coinstar because motivation is important. My parents immigrated from Denmark after World War II. I was raised in a family that came to the US that cared about good government, freedom, and democracy. They also cared about the free enterprise system, companies, and entrepreneurship.
They had a Nordic sense of progressiveness. They cared a lot about the social sector. That was in me. I knew that I wanted to work in all three sectors. This is a personal goal in my life. When I got career advice after my first job, it was like, “You do these things one at a time. Work for a company, volunteer at a nonprofit, and then be useful in the public sector.” Somehow it was very sequential. I was motivated to think, “Could I do all three of those things at once?” The language of the day was, “Can you do well and do good at the same time?”
That was the seed of Coinstar, which came out of this personal desire. Specifically, on Coinstar, I was lucky enough to go to Stanford. The reason I wanted to go to Stanford is not that they have a great MBA program, but they had a Public Management program. Stanford was already thinking about the integration of public sector resources and private sector resources. I hope one day they do a tri-sector degree when they start to integrate this stuff a little bit further with that.
While I was at Stanford, I got bitten by the entrepreneurship bug in Silicon Valley. People are always talking about startups and these things. I never viewed myself as an entrepreneur. I was more of a spreadsheet jockey and numbers guy. I moved around the country a lot. I always had this ever-growing jar of pennies, nickels, dimes, and quarters that I couldn’t get rid of me. I used to put them in little paper wrappers. Write your name. It was getting harder and harder to get rid of them.
I was thinking one day in classic entrepreneurship land, “How do you turn a problem into an opportunity?” I wrote to the Fed and the Mint and did some research. What I learned was that they had manufactured about $15 billion worth of physical coin stock to supply the US economy over the past 30 years. That’s the amount of metal that was sitting out there. I did a lot of customer research and hung outside of Bay Area supermarkets, “I’m a grad student. Do you have any coins at home?”
What I learned was that about half of that $15 billion or $7 billion was sitting on dresser tops in pennies jars and piggy banks. It was a terrible product. Half the product they made wasn’t even being used. The other half or the $8 billion circulated the economy and created this $150 billion market that turned over twenty times a year. I’m like, “There’s $150 billion worth of coins flowing through the US economy or more and all this money sitting on dresser tops. What if there was an easy way to have a machine where people put their coins in and convert them back into cash?” That was the seed of the private sector idea.
As I started pushing on it, I started thinking, “We’re successful in terms of getting enough units out there, getting all these old coins back into circulation, and also speeding up the velocity that they didn’t have to ever make another coin because there’s so much out there. We can simply reuse and repurpose what we already have. If we could do that, we could save the federal government billions of dollars in terms of reducing manufacturing costs, mining costs, sustainability, shipping, and transportation. This is a win-win with the company as well. That’s great, but it’s also super great for the Fed and the Mint.”
I started thinking about the social sector, the history of coins, and things like the March of Dimes. They raised a lot of money from dimes. Salvation Army during the holidays, will often have the Bell. My sisters had done the program where they would go do the Trick-or-Treat for UNICEF program instead of collecting candies as teenagers. They would go around with these orange boxes. I don’t know if you remember the program. People put coins in. That was a very successful program for UNICEF.
I was like, “We could have these machines that help people convert their loose change and their piggy banks back into useful cash, which would be good for the supermarkets. The more we do that, the more money the government will save. We could also add up a donation feature where people could donate funds to a charity of their choice, which would be great for the charity when you do that at a low cost.” I was like, “This is interesting. I could create a company that allows me to not only work in the private sector but be useful in the social sector and the public sector all at the same time.”Check what social sector strategy your company has and what kind of mission it upholds. Click To Tweet
I was young. I was 27. I was like, “I want to go for this.” I spent the next thirteen years of my life going through all the standard rounds of ventures. We took the company public and grew it. It worked, which was great. You can check the boxes on Coinstar as a private sector company. What I’m most proud of is the work that we did with the Fed and the Mint. They didn’t even know what to do with us. They were like, “You’re saving us so much money. How are you doing this? You’re just a company.” I’m like, “We embedded our work with yours.” Coinstar has probably raised close to a couple of hundred million dollars for nonprofit organizations. That’s an example.
I have to admit that I do have a jar of coins at home. It’s my Martinelli’s jar for my kids. It’s a way to collect coins. Every once in a while, when it’s full or near-full, we will go to the Coinstar machine at Safeway. There’s a local bank that has one here. We will fill the machine, walk out with $26 or whatever it ends up being, and then have an ice cream date with my boys. At least they’re thinking then that the coins that they see aren’t garbage.
We don’t use cash that often anymore, but my husband still likes to buy with cash and comes home with coins. They end up on the couch or wherever. We have turned it into an event. I like that you were in this solution thinking to create something that was a little different. I also think it’s interesting that I completed my degree at Santa Clara University and took a Social Benefit Entrepreneurship course. That professor was recruited to go to Stanford. He’s at Stanford in their business school. Who knows? Maybe he will be part of this tri-sector future.
It’s interesting. Business schools, public policy schools, and other parts of universities are addressing this problem, but they could go further because what we’re advocating for with a tri-sector model in our language is this. Things like social entrepreneurship, CSR, or even ESG can sit outside the core business, but we’re interested, at least on the company side how can their actual business do good fundamentally and bake in the impact, profit, and purpose in the core business model.
Let’s back up because I try to translate these acronyms for people. CSR is the Corporate Social Responsibility program. Many companies have them. In some cases, it’s like lip service to a specific thing to be something that the HR team can talk about. ESG is Environmental Sustainability Goals. I’m making sure we’re all speaking the same language.
Thank you for that. They’re important, but I don’t think they go far enough in terms of trying to drive this change that we want to see at the scale. I’m using Coinstar as an example. The government had created this $150 billion market. We hadn’t done that. We, as a private sector company, borrowed that as a way to reach customers and make them more efficient and those sorts of things. When we built the model, we built it in a way that was good for the government and us.
The way that worked was interesting. For instance, it was very exciting when we rolled out Los Angeles with 100 machines, which was our biggest rollout ever. I got back to Seattle and had a call from Washington, DC. It was the Fed. They were like, “Who are you? What are you doing? The West Coast has canceled all future penny orders. Come to Washington, DC and explain yourself,” which was both super exciting but there was also a little bit of a panic that this big entity was calling us up.
What was interesting is when the Fed understood what we were doing, they were like, “This is so interesting,” but they were also confused. They were like, “You’re not a customer. We haven’t hired you. You’re going to make this way more interesting. What do we have to do?” Our answer was, “You don’t have to do anything. You’ve already done your work. You already have an existing resource called the coin system. We’re repurposing it in a different way that also aligns with your self-interest.”
They were like, “We love this.” They were also helpful to us. The following year, I got a call from The Royal Mint and the Bank of England in the UK. They said, “We were talking to the Fed in the US. You’re saving the US government all this money. Will you do the same thing for us?” I’m like, “That sounds like a good opportunity.” I flew over. They were very excited and they asked us on the first trip, “What do you need to bring this service to the UK and all that?”
I’m like, “You need to talk to the supermarkets and a bunch of other people.” They set up all the meetings that week. We rolled out 1,000 machines in six months. I like to say that my private sector shareholders would never have gotten that benefit if Coinstar hadn’t embedded a public sector benefit into the core business model. It was fundamental. There was a way where these things could be synergistic. If we can think about how we work together with this whole-of-society approach, then we get a lot further.
Here’s the same thing to cover the social sector. It was a year after that. I got a call from UNICEF at the UN. We had 6,000 or 7,000 machines out in the US. They’re like, “We have this Trick-or-Treat for UNICEF program where kids go off and collect money. They send us 100,000 of these little cardboard boxes every year.” I’m like, “I know. My sisters used to do it.” They said, “We love the program, but it has two problems. The first problem is half the kids never send us the money. It’s not because they’re bad kids. They just don’t get around to sending the money yet.”
They said, “The other problem is the other half of the kids do send us the money. We have to pay someone to open up 50,000 orange boxes, dump out the coins, count them, and give them the bank account.” We said, “We’re mission-built for you. Instead of doing that, put a message on the back of those orange boxes.” It says, “Kids, take this little box down the local Coinstar machine and punch in a four-digit code.” What we would do was cut our fee in half and wire transfer at that point 96% of the funds directly to UNICEF’s bank account, saving a ton of money. It was great for them.
They were using our private sector resources to make their know long-standing social sector program work. If you come to this, use that example. We think about a business model or a tri-sector model where each sector, government, nonprofit, and company contributes something to the model and get a benefit so that they all want to play together. That’s where it started. Now, it has gotten a lot bigger from there, but that’s the core of where I started thinking about tri-sector solutions.
Another example might even come from the world of recycling. I’m thinking about some of the systems that exist in Germany in particular, less so here in the United States, where they will have the old-style fashion glass bottle of Coke get refilled numerous times. We have walked away from some of these methods of procuring and using things like the beverages that we might consume. We have gone to this plastic and wasteful world for the most part.
We’re starting to see some resurgence along these lines where companies are starting to say, “You buy the glass bottle, redeem it each time, and bring it back. We will give your credit back.” We’re starting to see more of that, but in my humble opinion, it’s happening far too slow. What might you say that we could do to accelerate this process of getting to a space where people are thinking more innovatively about how to make solutions that do bring into the central frame this trifecta?
I love the recycling example from Germany. Let’s take that and zoom way out. Let’s think about not just the milk bottles or soda bottles that are out there in glasses but let’s think about all the resources in the world. Let’s think about everything that has ever been built by a company or a nonprofit and every road, database, and truck that’s out there. Based on our best research, we think there’s about $500 trillion of value on the world’s balance sheet.
Instead of building a bunch of new stuff, what we’re wondering is, “Can we recycle or repurpose what we already have? If it was built for purpose A, could it also be used for B, C, D, and E?” If we can be smarter and wiser about how we use what we already have, repurpose them, and recombine them in different ways, then we can have a much more sustainable economy. That’s a big jump from going from the milk bottle global repurposing or recycling piece.
In terms of your question about what people can do, the first thing to do is to adopt this mindset. It’s hard to get people to think differently. You are an individual and let’s say you’re working for a company. This also works for nonprofits and governments but let’s stay with companies because they’re 80% of the balance sheet of the world out there. You can start to think about what your company does and how your company can start to adopt a tri-sector model.
We do a lot of advising to companies, little ones, medium-sized ones, and big ones. It’s interesting that small ones tend to be more innovative and faster moving. I’ll ask them three core questions. If you’re a company, I’ll say, “What’s your private sector strategy?” They will have good answers, “We’re building this product and doing it these ways.” I’ll ask them, “What’s your social sector strategy? How are you working with either local or national nonprofit organizations in a way that is mission-aligned with what they’re trying to do?”
Often social sector organizations have interesting resources that could be useful for the business, like Coinstar and UNICEF. They’re often useful resources the business has that could be useful to the social sector. If you’re thinking about your company, ask yourself what a social sector strategy is that serves the mission of the social sector and also serves the mission of what your company is trying to do. Most people get that question. I say, “What’s your private sector strategy, social sector strategy, and public sector strategy? How do you work with governments?”
Often people in the private sector recoil. They’re like, “Why would I want to work with the government? They’re going to slow me down, regulate me, tax me, and get in my way.” I’m like, “You’re thinking about this wrong. Governments are vast sources of amazing resources. They’re important in society.” If you can think about a strategy for your business that works in conjunction not in a public-private partnership way but in this resource-leveraging way, then you can do stuff from your company that’s good for the government, like what Coinstar did with the Fed and the Mint.
They can also do something good for you. You can accelerate those things. Individually, for your readers working in companies, I would encourage them to adopt a tri-sector mindset of private, social, and public sector strategies. More specifically, at NewImpact, we’re trying to advocate for this approach and starting to build innovative tools because we’re all about innovation and impact at scale.
We have some very easy introductory tools that people can find on the website. We’re building a tri-sector innovation Business Model Canvas and dashboards. Some of them are PDFs. There’s a new one coming out in MURAL, which will be interactive. People can start to play and explore with these innovative tools. As we have been leaning into the work, what we’re realizing as a nonprofit is that we need to think about our resources differently as a world.
It’s super hard to find the resources that I’m talking about easily. You can’t do a Google search and say, “Who’s on the team for housing or clean water?” Think about resources and stuff. We’re starting to advocate for an open-data or open-impact innovation knowledge commons that we’re calling CommonSource.care, which is a knowledge commons for the common good. We can’t build it. That’s not within our zone, but we’re interested in finding technologists who want to help drive, scale, and change.
Wikipedia and Linux are great examples, but we think there need to be new connection tools that let us as consumers and innovators connect to the resources and the companies that are doing stuff. There are some practical data tools that people can use. For some of your readers who might have some of those skillsets, we’re interested because we think there needs to be more connective tissue in the world to be smarter about how we’re using our resources.
The last thing we do is some advisory work. We’re starting to work with the universities, accelerators, and incubators and trying to bring these tri-sector mindsets. If anybody is working in early-stage innovation or impact or is thinking about that, occasionally, we can help directly. We’re not a consulting company, but we sometimes act like one in very specific cases.
I did work years ago with this company in New York called Propel, which is completely revamping the food stamp system in the US. It’s an extraordinary story. They were able to create a tri-sector model on top of the Department of Agriculture’s Supplemental Nutrition Assistance Program or SNAP. There are a lot of stories like that on the website that people can get as inspiration as well.
I want to thank you for that in-depth explanation. You mentioned a couple of things I want to go back to. One is the Business Model Canvas or BMC that your company is creating to help people put their one-page business plan into effect. It could take these three things into consideration. Is that something that they can find directly and easily on your website?
They can go to NewImpact.care. We’re evolving these tools rather than creating them from scratch. This is an expansion of a lean startup canvas, which is taught at Stanford and other places, or the Strategyzer Business Model Canvas that people are familiar with. We want to add a tri-sector lens to it to get people thinking this way. We’re starting to build these interactive tools. The people aboard MURAL can put stuff in and track these things. We’re starting to experiment with other organizations.
Having used that Business Model Canvas or BMC as put forth in many business plans or many business schooling programs too, I found it to be an easy way to get your thoughts on one dashboard where you’re like, “I’m considering all of the pieces of the pie. I see where I’m weak. I see where I need support. I see where I may need the skills of a cofounder to hone in on this particular spot.” I love that exercise. It makes a lot of sense to me that you’re expanding on these exact existing resources that may be fairly well-known. That’s great.
We’re repurposing what’s there and trying to add a little bit more to it. That’s interesting. The process you described for yourself is powerful and a lot of people have gone through it. What we’re suggesting is that you can add a few more questions about other sectors and resources in there. You can not only embed impact more directly into your company but also make a stronger company. Profit and purpose do not have to be in conflict. There is a way to harness them. That’s what we’re proposing to people to think about.
This is the wave of the future. It’s what we hear from, especially Millennial employees. They are considering your profit, purpose, passion, and all things in one as being the companies they want to work for and spend their time at. That’s not unique to that generation. It’s across generations. It’s what has driven me to stay within the natural products industry for the entirety of my career because I feel like I can make a difference in helping people have the best health possible by giving them access to great nutrition and good information. Honestly, even in defining what I was doing with this show, I used a BMC model to try and figure it out.
“What are my brand, mission, and purpose? How is it going to align? How am I going to fund it? How much money am I willing to personally invest in this thing, whether or not it’s paying for itself?” Asking all of those questions on day one enabled me to have a much clearer vision of where I was going to take the show. Those tools can even be used if you’re trying to define what your personal purpose is in the world. You don’t have to have a business to use that tool. You can use it to align where your values are and what you want your life to look like, even within the walls of your home.
I 100% agree with you that if you’re a company and you want to recruit, especially younger employees, this is no longer optional because it’s becoming self-evident that we need to upgrade our systems if we’re going to have a future that we like. We’ve got to get there faster. I feel a real sense of urgency that we’re not solving problems at scale fast enough. We have done work with foundations and looked at issues around food insecurity, homelessness, and COVID relief funds.
We looked at a rotation for people coming out of the military. Apprenticeships are super interesting. What all of those issues have in common is that no one sector can solve them on its own. My concern is sometimes, we take this isolated, siloed approach. Sometimes I’ll talk to people in the federal government. They’re working on an issue. The big idea is, “We will get to different departments within the federal government to work together,” which turns out is hard.
That’s a good thing, but I’ll often say to them, “Let’s say you get these two groups of the federal government. Let’s take the Department of Labor and the Department of Ed working together.” That’s great, but that’s not how people live their lives. They might be interacting with state-level entities or their city or school district. They’re also going to be interacting with companies and nonprofits.
Unless you take a human-centered approach to solutions with a tri-sector mindset, you’re unlikely to get to a solution that works for people. That’s part of this mindset shift of trying to get innovators in the world to think differently and recognize that we’re all in this thing together. It’s a classic comment. We’re especially in this thing across the sectors. We get so siloed and even point fingers at the other sectors. It’s super hard to work together sometimes.If everyone can be smarter about using and repurposing resources and just combining them in different ways, the world can achieve a more sustainable economy. Click To Tweet
I want to also bring up another example that I thought. Given that I’m in California, there were incentives to do things like installing solar on your home. Even when we went to install an electric car charger, there was an incentive from PG&E to encourage that. They would give us a $500 credit toward our bill by installing a charge point or the fact that we now have these almost democratized access points where you can go and charge your vehicle while you’re shopping at a grocery store.
There are these examples even in this newer technology space of electric vehicles where there are companies thinking about the social benefit, the private benefit, and the public benefit all in one and trying to get people to open their minds a little bit because, as you go to your website, www.NewImpact.care, and you look at examples, it can get you thinking more creatively.
If you start to look for these things, then suddenly, your mind will open up and you will be more likely to see the power of connection and ways that you can innovate your business to produce greater results for you, improve profits even, and create different revenue streams that you might not have seen before because you’ve opened your mind to a new possibility.
I love this stuff. Here’s what’s fun for me too. When I talk to early-stage innovators and small entrepreneurs, they often face this question, “What do I make? What do I buy? What do I build?” What they don’t think so much about is, “What can I borrow from the government? What can I borrow from a nonprofit organization?” It’s the same thing for the other entities coming back and forth. You can’t borrow it and not honor their self-interest. You have to do something good for them.
When people open up their headsets to think more holistically, it is shocking how many resources are out there. The government is a tremendous resource of data. They come and collect all this information. It’s just often sitting around. You can harness it. Zillow is a company built on the real estate property databases collected by our tax dollars, which is pretty interesting.
Coming back to your comment about the subsidies or the incentives with utilities, it’s a great example because think of it. If you’re a power utility or water utility, it’s expensive to build a new power plant and not so great for the climate. If you can get people to upgrade their washer, dryer, refrigerator, or car to something that’s more sustainable, then they can save money. They’re aligning their interests about how to get good power out to people without having to spend some huge amount of money for a whole new plant, which we don’t want, and also get a better outcome.
It’s thinking through about what are the resources out there we can repurpose them and how we put them together in interesting ways but importantly, make it work for everybody. It’s okay to talk about the self-interest of the government not on the political side so much but on the operational side and the self-interest of nonprofits. You can get that piece figured out. These models work well and scale quite quickly. They’re self-sustaining.
I do want to pivot to talking about something that relates to funding companies. In prior episodes, I’ve included my connection with Talia Antonietta. She has a podcast called The Social Impact Startup Podcast. There’s also my interview with Sarah Dusek, who’s a Founder of Enygma Ventures. We talked about the fact that women-led companies still get far less in the way of VC money. 2021 was a trend downward.
During the pandemic, women-founded and run organizations have seen fewer VC funds than they did in 2019. We’re down to around 2% again, which is disappointing. I wondered what your thoughts were specifically about funding organizations. From what I’m seeing, at least, there seems to be more interest in building social impact into the strategy for women-led companies, generally speaking. I’m curious how you see this, how we can push that change forward, and what your perspective is.
Money is a funny thing because it tends to follow deals. There are a bunch of barriers that get blocked in terms of who sees what deals. If I were a female entrepreneur or any entrepreneur, I would lean heavily into this approach because it’s a smarter way to build a business with impact, growth, and profit. People can be leading with new approaches at some point in the venture capital community. I don’t have a lot of insight into the venture capital community.
They have to start paying attention to simply better things. The bias that’s there has been well-documented. Why it hasn’t changed, I don’t know, but if we can get more examples out there, they’re simply going to have to provide more equitable funding not only for female entrepreneurs but also for BIPOC entrepreneurs. There are lots of barriers throughout the system and access to capital.
You’re talking about how the system has to catch up for women and then also BIPOC.
The capital system has had some overhang for many years. It needs to catch up with modern innovation and entrepreneurship for not only female-based founders but also BIPOC founders. There needs to be more equitable access and democratized access to capital of all sorts. One of the ways to do that is to simply show up with more innovative deals. That will be more interesting. We think the tri-sector models can be part of that.
I would love it if there’s a female-founded accelerator or BIPOC accelerator-incubator. It’s for them to adopt tri-sector approaches and use that as a way to say, “These things are better, faster, and stronger.” I’ll give you one example I mentioned before with this company in New York called Propel. They’re revolutionizing the food stamp program. I won’t give you the whole story. You can read about it. What was interesting is they now have capital from the top five venture companies like Andreessen Horowitz, Kleiner Perkins, and some of the brand names.
Had you asked me years ago if a Silicon Valley venture capitalist would back a startup working with the old federal social safety net program, the answer is no, but because Propel was able to do something so compelling and useful to low-income Americans, they simply couldn’t ignore it. Their eyes have been opened up, “There are powerful opportunities out here.” The capital does change. Sometimes it changes quickly and sometimes slowly.
This information has been so valuable thus far. As we deepen our conversation, I want to ensure that everyone has a chance to get more acquainted with your work. I’m going to mention your website. Go to www.NewImpact.care to learn more about what Jens Molbak and his team are doing. You can also follow their work on Twitter, Facebook, and LinkedIn.
I have another example that came up for me. I work in the algae space. I’ve been connected to this woman for some time. Her name is Alexia Akbay. She’s the founder of Symbrosia. This is a company that is looking to feed algae to cows to reduce their methane production. They have been funded in a $7 million round Series A led by Danone Manifesto Ventures. If we think about this, Danone, the French company, makes yogurt products. They have a lot invested in cows.
They’re building this strategic partnership with someone who will reduce our methane production, which helps them meet their goals for carbon sequestration or greenhouse gas issues. Also, it’s creating a more healthy meat and dairy product as an end result. To me, this fits the social benefit and the public benefit. I’m not exactly sure how the government will be involved in that, granted they tend to regulate things. There’s the overall social and private benefit for sure. I’m curious to know what you think about this model.
I don’t know much about the company, so I’m shooting from the hip here, but I promise you that there are many government entities that are thinking about cows, farms, runoff, and ways to reduce that impact which would be quite interested in this technology and this shift and may have existing programs, resources, or even dollars that could be helpful for that transformation. I’m just making this up, but I bet if you were to go look around the Department of Ag, which is one of the reasons we want a public access database, someone could type these things in and find them. I’m sure the EPA would have a lot of interest in methane emissions. There may be programs that I’m sure the UN will back.
They could be part of this too. I’m not sure, but I see what the public eye sees in this case. I’ll be inviting her to a future episode of the show. I saw this news hit.
I also asked her about the social sector organizations because there could be a real health benefit to a variety of people in terms of eating higher-quality meat or there could be other social sector organizations that have thought a lot about climate change or methane emissions which could be supportive. One of the things that I’m so intrigued by is we have this vast abundance of resources that we don’t even know exists.
We’re not connected. We don’t have enough connective tissue in the world to be able to link these things up, but I promise you that if she and the company were to start digging, she is going to find useful resources in the social sector and the government sector beyond what she has already found. That could make the company stronger and accelerate. That’s what we love about this work.
I’m thinking about the whole picture here. I would like to better understand how we can companies utilize this tri-sector innovation to unite profit and purpose a little bit more. Can you get very explicit and clear on that?
They’re not separable. They’re in the core model itself. They’re not two things that you have to force together. Coming back to the Coinstar example, the more successful Coinstar was, the more people it reached, the more people that helped convert their coins back into cash, and the more supermarkets in more distribution points. That was great for Coinstar. At the same time, the very fact that we were getting larger and we did more recycling was good for the government. We weren’t charging the government. We weren’t asking a fee for it.
We designed the model in a way where they win and we win at the same time. That’s the embedded nature of it. I used to joke that Coinstar’s ticker symbol when we were traded on the NASDAQ was CSTR. We embedded CSR into the DNA of the company. This question about how you do it becomes a real question of business model design about getting very explicit about what resources you will use and how you will hook them up and ensure that there’s a benefit that serves both people at the table.
There’s another company we have done some work with in New Jersey called MoCaFi, which is looking at credit lending into BIPOC communities. There have been settings where they’re often stuck with payday lenders. They’re using the Section 8 housing database to enhance credit scores. I can go into that. It’s a situation where the more successful they are with using this data in terms of improving the financial outcome of the people who are using most of the MoCaFi payday lending products, then that’s better for the housing system too. We’re trying to point out to people that there’s often this tension between profit or purpose or concessionary and impact investing.
We’re trying to say, “If you adopt a tri-sector model, these things are synchronous and synergistic.” That’s the interesting thing about it. What’s interesting is if you can make them synergistic, then this can spread. There could be hundreds or tens of thousands of organizations across the world that think this way. We can start to have this change that we all want to see at scale happen much more quickly, but it starts with the mindset shift and harnessing that self-interest with the existing resources.
We have talked a bit about some of the applications. I want to go to this question of how tri-sector innovation can be used to address challenges in areas such as homelessness, affordable housing, and food insecurity, which you alluded to a little bit earlier. How do you see this coming together with rising homelessness issues and rising costs of living in many cities around the country? I could have doubled my rent on my tenants over the years and have chosen not to, but because market demand is such in our local area, you could do that. What do you see this tri-sector innovation doing to contribute to those arenas?
I’ll start big and then go very specific. These are all huge challenges that we have not solved as a society. It’s embarrassing to me as a resident and citizen that we’re still struggling with some of these things or a lot of these things. In some cases, it’s getting dramatically worse. We cannot expect one sector on its own to solve this. If the government can’t solve homelessness or food insecurity, neither can the private sector nor the social sector.
By definition, we need to bring the full array of all of our resources as a society to bear it. If we don’t, shame on us. The question is, “How do you do that?” We think a lot of this stuff is a tri-sector example. Let me be specific. In 2021, we received a grant or a (c)(3) from the Morgridge Family Foundation based in Denver. They had been doing work around food insecurity with a local food bank called Metro Caring. They had also been doing some research on different approaches to food insecurity and the food system, which is a long conversation that we can get into.
There has been some pioneering work done on the concept of potentially using a public utility model for food insecurity. They called us up and said, “You think about innovation, the government, and these different sectors. Would you please take a look at what role or utility might be used for food?” We use utilities for water and power. Utilities in the ’30s were an important way to democratize and create equal access to clean water and power throughout the countries. Could we do that in a modern sense?
We went through an interesting analysis about food insecurity. We have created a prototype model for a public utility called the Denver County Community Food Utility that thinks about ways to deliver food in a way that deals with hunger and a bunch of other issues that are out there and also pay for itself. We have extensive information on the website. That’s an entire episode on its own to go into depth on it. That’s a case where we’re able to take a look.
This is blue-sky thinking and there’s a lot of stuff to be tested on it. We have a concept called Universal Basic Food and we have something called the Community Data Commons, which we think changes data and whatnot. It has been interesting to apply this tri-sector lens to an issue like food insecurity. On homelessness, we have done a very early-stage project years ago with the University of Washington. A big issue in Seattle, which is my hometown, has been homelessness.
We asked the students to do a couple of things. We said, “Who’s on the team for homelessness who has resources that might be helpful to homeless people?” They created a map. We’re putting this in a public Wiki called the NewImpact Wiki. We were all so surprised to see how many organizations were working on homelessness. It wasn’t just the city of Seattle and the county. There were hundreds of nonprofits, companies, and government entities. No one had a view of the whole network or the ecosystem about homeless resources. They weren’t coordinated.
Our first thing was, “There’s a lot of stuff happening here. If we can put all of our resources on the table and coordinate a bit better, that would be helpful.” That was one step. The mapping of resources is very important for homelessness. The second thing we did was we started to develop a tool, which we call an Impact Journey, which is a little bit like the human-centered design or an empathy journey and design thinking, but it’s done with a tri-sector lens.
We interviewed around 40 experts in homelessness and heard many heartbreaking stories, but we created a journey from someone stable to someone who enters homelessness. We walked through all the different points about what can happen and whether they move toward homelessness or not. We mapped out the players, companies, nonprofits, and governments who could be useful at those points in time to create roadmaps to intervene.When people start to think more holistically, it is shocking what kind of progress can be achieved. Click To Tweet
It was so interesting because all these different players showed up over time. For instance, the city of Seattle used to have a three-week payer vacate notice. If someone was going to be evicted, they get a note on the door after three weeks that says, “You’ve got three days to get out or stay.” That manufactures homelessness. We spent a lot of time thinking, “Are there different mechanisms that could be used at that point?” We started to think about a rental insurance model to stabilize people in that, which is an interesting piece.
We also looked very carefully at vehicle homelessness. Around half the people in Seattle live in their cars. An interesting thing that grad students found is that if they live in their car or RV, they probably have an expired license tab. The policy at that time was if you are in your vehicle and you have an expired license, you can’t get towed, but if you leave your vehicle, you can get towed. If you’re homeless and living in your car if you want to apply for a job, get some support, or take a shower, you risk everything because your car might get towed because it’s got the wrong tab on it.
That’s a policy problem as a resource. Homelessness or food insecurity is super complex, but if you can break the system down and find some different points, “The city can change this. A company can change that. A nonprofit might have issues here,” what’s a complex problem might be able to get solved in small but important bits. The most powerful piece about it is viewing the entire problem through this tri-sector piece and this whole-of-society approach. You can tell I care about this stuff.
Tri-sector solutions are not only amazing for companies but could also be fundamental to driving progress on social sector problems and economic problems, many of which you’ve mentioned in the episode already, and employment climate-related problems. We do not organize the world’s resources around climate to make it easy to figure out who’s on the team for clean water or clean air. We all are, but we need to get down to the real practical steps about who can do what, where, when, and how. How do we leverage what we already have?
It is sometimes challenging to even figure out in your local community who you need to contact for these things. I completely agree. I had decided I wanted to spearhead composting as an issue in my local community. I was frustrated by the fact that we had these green waste bins and supposedly the systems by which to compost or support composting but no real program for it. Everybody throws their food trash in the trash bin if they aren’t into home composting.
I kept at it with my local community. I’m emailing council members and things along those lines to try and put that conversation forward into another space. They ended up implementing a composting program in February 2022. I can’t claim that I’m the sole person that drove that. It came from many people, but by continuing to put forth my thoughts, at least to my local community, hopefully, that had an impact. I have to trust that it did in some way.
I love this story. Let me jump in on this. We’re in the 21st century. There’s an expression that Andrew Yang uses, “Data is the oil of the 21st century.” We used to have things. The law of the commons was about land. Much of our solutions can be around more thoughtful use of data and technology. As people, we have been turned into products as opposed to customers, but every now and then, I think, “If I could have 100 supersmart Google or Facebook engineers working on issues of impact and creating technology tools for humanity, that can help us drive forward. We would make so much more progress faster.”
I put a call out to your community that we need to find what I believe are public-good technological resources so that you can find out who’s doing composting in your city. What you learned can be used by twenty other cities. We can have this iteration. We have the technical skills as a society to do this stuff. It’s not that hard, but we don’t yet have the will to create the connective tissues so we can get smarter and use what we have. That includes our existing knowledge.
This reminded me of a conversation with someone I interviewed. That’s David Johnson. He’s a professor of law and design thinking at Stanford University. He is developing a technique that can borrow from design thinking and some elements of social activism. I’m curious to know when he finally gets ready to release that book. It was going to be called Climate Activism by Design or something along those lines as a working title. It was meant to be a model by which to apply it to some of these broader things so that people working in networked cells could create change. I do believe that’s something that we need, but I’m not sure what it looks like either.
It’s interesting. I love design thinking. When I built Coinstar, I hired David Kelley’s design studio to build the first Coinstar machine. I feel lucky to have been able to work with that group, which is now called IDEO. Design thinking was designed for products and services. What we need as a society is thinking about organizations. We need to update our design thinking skills, human-centered design thinking skills, and tri-sector thinking skills around how we build our companies, governments, and social sector entities.
We need this mindset shift. In addition to the mindset shift, we need information so that we can get connective tissues. It’s not enough to get people thinking this way. We have to build practical and pragmatic tools and specifics so that what you’re doing in your hometown, someone else can learn from somewhere else quickly and easily. That can relate to activism too. The question is this. What are you being active about? What are the brass tacks that it comes down to? That’s the information we need to float.
Maybe it comes down to funding. There are grant prizes that are government-funded for creating solutions that do these three things. There could be any number of programs put together that are supported by the government and get us thinking about how to build a different version of capitalism that isn’t purely extractive because that’s where we have had our major failing. It’s not to say that capitalism is completely broken. It just tends to promote extraction, whittling of costs, maximizing profits, and not considering the planet as a stakeholder. When we do that, then we’re building businesses that might make us a buck or a lot of money, but where are we going to be in ten years?
To be clear, I’m a capitalist. I believe in capitalism and yet it has only gotten us so far. Going back to your food example, 1 in 7 people in the US is food insecure. That is a market failure that needs to get addressed so we can keep running with capitalism and getting the results that we have, which on the one hand, are pretty amazing. Globally, it has lifted many people out of poverty and improved their health.
There are many things to celebrate about capitalism, yet it needs to keep evolving because it’s not good enough. We’ve got to keep advancing the thinking on it and the practical implementation to make it serve people so that we as people are getting to create the future we want. I’ll give a shout-out here to the UN Global Goals. I don’t know if you track the Global Goals. Does your community know what the Global Goals are?
It’s always good to summarize because we get new readers all the time.
The UN created something called the Sustainable Development Goals or in shorthand, the SDGs. There are seventeen of them like Good Health, Gender Equity, and Sustainable Cities. There’s lots of information online about them. Below them are our targets. There are 17 big goals and there are 169 targets. There are interesting sets of goals for each country in the world to think about. If we could live in this kind of world, what would that world look like? They’re specific.
We use them as a data taxonomy to organize our resources. If I want to know who’s on the team for the SDG target 2.1 Ending Hunger, I can go search in the database and find companies or nonprofits out there. Those goals are important. What we need to do is to think about ways to make them come true. Not everybody can do everything, but every company, nonprofit, and government is on a team.
We’re trying to reorient people’s thinking, “What teams am I on? How can I contribute to these larger pieces to make the world we want to see happen?” I would encourage your readers to look at the SDGs or the goals and to think about how their company, nonprofit, or government can be useful and serve them. They have been a good guiding light in terms of what the world could look like.
I will include that in addition to a couple of IPCC reports, which is The Intergovernmental Panel on Climate Change because these two things are pretty connected. I encourage people to continue on this journey to educate yourselves. Jens, we have spoken. This has been my pleasure. If there’s a question that I haven’t asked that you wish I had, what might it be if you could answer that?
I would come back to encourage your readers to think about seeing their organizations differently and to ask those three questions, “How am I interacting with other private sectors, social sectors, and the government?” It’s to start to see solutions with this whole-of-society approach, which is the big lens. It’s super practical. Get into it and see, “I can do this.” Share it and talk about it. That would be what I would finish up with. You asked a lot of great questions. I don’t think I have one that pops in mind that you didn’t ask.
We will have to come back at some point and talk about food security and perhaps a little bit deeper into that subject in particular.
Our food work, which is also on the website and under the Community Food Utility stuff, is some of the most transformative stuff that we have ever put together. It will take 10 or 15 years to get tested, but if it’s close to being real, it’s a game-changer for the climate, health, education, and a bunch of other things.
Perhaps that should be on the other show I host, Nutrition Without Compromise, because the whole ethos of that is nutrition without compromising your ethics or the health of our planet.
I look for talk number two. Thanks, Corinna.
Thank you, Jens, for your hard work and for joining us. This has been my pleasure. As we close this show, I want to invite you to tap into your curiosity, seek out and support businesses, and inform yourself using tools like NewImpact.care. They’re putting their money where their mouth is, walking the walk, and building a better and more sustainable future for all of us.
You, too, can vote with your dollars and do more good. You, too, can share this episode with people in your community that you think need it. They could learn from it. You could even grab your bestie’s phone and download this episode right onto it for them, so they are that much more likely to read it when they have time. This is important stuff, especially for entrepreneurs, change-makers, and business builders around the globe.
If you have questions for me or Jens, I hope you will send me a note at Hello@CareMoreBeBetter.com, or better yet, leave me a voicemail by clicking that microphone icon in the bottom right-hand corner and recording a message. Who knows? Perhaps I’ll even play it on a future episode. Thank you, readers, now and always, for being a part of this show and this community because together, we can do so much more. We can care more and be better. We can even regenerate Earth. Thank you.
- Supplemental Nutrition Assistance Program
- Strategyzer Business Model Canvas
- Talia Antonietta – Previous episode
- Sarah Dusek – Previous episode
- Twitter – NewImpact
- Facebook – NewImpact
- LinkedIn – NewImpact
- NewImpact Wiki
- Impact Journey
- David Johnson – Previous episode
- Sustainable Development Goals
- The Intergovernmental Panel on Climate Change
- Nutrition Without Compromise