Patient Capital

From Seth Goldin

Patient capital, markets that work and ending the endless emergency of poverty

Multiply the population of the US by three. That’s how many people around the world live on about a dollar a day.

Do it again and now you have the number closer to $2. About forty percent of the world lives on $2 or less a day.

What’s that like? What happens to you when you have two dollars a day to live on. It’s almost impossible to imagine. I mean, $2 is the rent on your apartment for about 45 minutes. $2 buys you one bite of lunch at a local restaurant…

And yet, two billion people survive on that sort of income.

The key issue is ‘survive’. Subsistence income means that you have the barest possible cushion, that every penny is spent and you are on the edge at all times. It makes life an emergency.

If every single thing goes perfectly, then you and your family will go to sleep tonight healthy, not too hungry and fairly safe. But of course, every single thing almost never goes perfectly. If you are bitten by a malaria-carrying mosquito, you need to buy medicine and so there’s no money for food. If you need more water, you have to spend two hours walking to and from the nearest half-decent water spot, and those two hours are the two hours you were going to spend harvesting the food your kids need.

From a fundraising point of view, this endless emergency is exactly what a non-profit needs to find and close donors. A dollar donated today will save someone’s life. It will. One dollar, one life. That’s urgent. As urgent as it gets.

The problem, of course, is that it doesn’t save that person’s life forever, it saves it for today. Tomorrow, there’s another emergency, and yesterday’s dollar is gone. So you need another dollar. Two billion people, two billion dollars. Every day. Today, tomorrow, the day after that. It’s an endless emergency, and it never gets better.

That’s where patient capital comes in. It starts with this belief:

The difference between being one penny behind and one penny ahead is profound.

If you’re one penny behind, then every day you fall further back. Every day, the emergencies get worse, the stress gets worse, your ability to survive (never mind thrive) gets worse.

If you’re one penny ahead, though, just a penny, then every day you build a reserve, every day you are able to invest in productivity or peace of mind, and soon you are two pennies or a dollar or five dollars a day ahead. And then you can send your daughter to college. And then you can buy something from the merchant next door. And then you can plant a better crop. And then you have a stake in the community, and then the world changes.

So, how to create this micro surplus? How to prime the pump of the system to improve productivity enough that things get better?

Markets.

When two people trade, both win. No one buys a bar a soap unless the money they’re spending for the soap is worth less to them than the soap itself.

When someone in poverty buys a device that improves productivity, the device pays for itself (if it didn’t, they wouldn’t buy it.) So a drip irrigation system, for example, may pay off by creating two or three harvests a year instead of one.

What does that do for the family that buys it? Well, if you have one harvest a year and you’re living at subsistence, it means your income is zero, or probably just a little below. If you can irrigate and get two or three harvests a year, though, your income goes up by infinity. Now, instead of making -1 pennies a day, you’re making 100 or 200 pennies a day. That’s a surplus of $700 a year. That’s enough to participate in other productivity or life-enhancing investments, like a well, or a roof, or health care. Now, the edge is a lot further away.

And what does that do for the family that sells it? When markets arrive, productivity increases and new innovations can be diffused more quickly, because change is brought in by the market.

How does Acumen Fund create these markets? The answer is patient capital. The companies that are selling solar lamps to replace kerosene or water purification systems in tiny villages, or housing projects for peasants in Pakistan or even ambulance services in Mumbai fully intend to make a profit, but the venture capitalists on Sand Hill Road aren’t in a hurry to invest in them. The investments are a little too risky, take a little too long or a little too unproven to take a chance on.

So Acumen finds these entrepreneurs on site in the developing world, funds them, teaches them and pushes them to build really big organizations. A to Z has literally thousands of people in their modern factory creating malaria bed nets in Tanzania. And so it grows.

I’m thrilled at the work Acumen has done, and excited about where the fund is going. I’ve got some interesting fundraising ideas to share with you this fall, and I thought it was worth taking you through my reasoning as to why I chose this organization as the recipient.

Any entrepreneur or marketer can learn a lesson from how new systems create new markets, and how an infinite increase in income or productivity can change everything. Everything.

The hierarchy of success

From Seth Goldin

I think it looks like this:

1. Attitude
2. Approach
3. Goals
4. Strategy
5. Tactics
6. Execution

We spend all our time on execution. Use this word instead of that one. This web host. That color. This material or that frequency of mailing.

Big news: No one ever succeeded because of execution tactics learned from a Dummies book.

Tactics tell you what to execute. They’re important, but dwarfed by strategy. Strategy determines which tactics might work.

But what’s the point of a strategy if your goals aren’t clear, or contradict?

Which leads the first two, the two we almost never hear about.

Approach determines how you look at the project (or your career). Do you read a lot of books? Ask a lot of questions? Use science and testing or go with your hunches? Are you imperious? A lifehacker? When was the last time you admitted an error and made a dramatic course correction? Most everyone has a style, and if you pick the wrong one, then all the strategy, tactics and execution in the world won’t work nearly as well.

As far as I’m concerned, the most important of all, the top of the hierarchy is attitude. Why are you doing this at all? What’s your bias in dealing with people and problems?

Some more questions:

• How do you deal with failure?
• When will you quit?
• How do you treat competitors?
• What personality are you looking for in the people you hire?
• What’s it like to work for you? Why? Is that a deliberate choice?
• What sort of decisions do you make when no one is looking?

Sure, you can start at the bottom by focusing on execution and credentials. Reading a typical blog (or going to a typical school for 16 years), it seems like that’s what you’re supposed to do. What a waste.

Isn’t it odd that these six questions are so important and yet we almost never talk or write about them?

If the top of the hierarchy is messed up, no amount of brilliant tactics or execution is going to help you at all.

Tell a Great Story

From Seth Goldin

Great stories succeed because they are able to capture the imagination of large or important audiences.

A great story is true. Not necessarily because it’s factual, but because it’s consistent and authentic. Consumers are too good at sniffing out inconsistencies for a marketer to get away with a story that’s just slapped on.

Great stories make a promise. They promise fun, safety or a shortcut. The promise needs to be bold and audacious. It’s either exceptional or it’s not worth listening to.

Great stories are trusted. Trust is the scarcest resource we’ve got left. No one trusts anyone. People don’t trust the beautiful women ordering vodka at the corner bar (they’re getting paid by the liquor company). People don’t trust the spokespeople on commercials (who exactly is Rula Lenska?). And they certainly don’t trust the companies that make pharmaceuticals (Vioxx, apparently, can kill you). As a result, no marketer succeeds in telling a story unless he has earned the credibility to tell that story.

Great stories are subtle. Surprisingly, the fewer details a marketer spells out, the more powerful the story becomes. Talented marketers understand that allowing people to draw their own conclusions is far more effective than announcing the punch line.

Great stories happen fast. First impressions are far more powerful than we give them credit for. Great stories don’t always need eight-page colour brochures or a face-to-face meeting. Either you are ready to listen or you aren’t.

Great stories don’t appeal to logic, but they often appeal to our senses. Pheromones aren’t a myth. People decide if they like someone after just a sniff.

Great stories are rarely aimed at everyone. Average people are good at ignoring you. Average people have too many different points of view about life and average people are by and large satisfied. If you need to water down your story to appeal to everyone, it will appeal to no one. The most effective stories match the world view of a tiny audience—and then that tiny audience spreads the story.

Great stories don’t contradict themselves. If your restaurant is in the right location but had the wrong menu, you lose. If your art gallery carries the right artists but your staff is made up of rejects from a used car lot, you lose. Consumers are clever and they’ll see through your deceit at once.

Most of all, great stories agree with our world view. The best stories don’t teach people anything new. Instead, the best stories agree with what the audience already believes and makes the members of the audience feel smart and secure when reminded how right they were in the first place.

Yosemite

 

 

Quote from Vi

To live is to take chances, to try to do more, to be more, to have more. People are not born equally; some have more than others. If we all just sat by, happy with what we have…then the world will never change. Poverty will keep existing. People will keep dying of sickness in which there are cures. It’s not a bad thing to have expectations, to have goals, to dream…and if we know to stop a lot, enjoy the view, then move on –then that’s happiness. But as Gandhi says, “You must be change you wish to see in the world” …don’t just sit there and be happy with what you have. Dream big, take actions, enjoy where you are and move on. =)

Growth

The Explorer

The explorer returned to his people, who were eager to know about the Amazon. But how could he ever put into words the feelings that flooded his heart when he saw exotic flowers and heard the  night-sounds of the forests; when he sensed the danger of wild beasts or paddled his canoe over treacherous rapids?

He said, “Go and find out for yourselves.”

To guide them he drew a map of the river.  They pounced upon the map. They framed it in their Town Hall. They made copies of it for themselves. And all who had a copy considered themselves experts on the river, for did they not know it’s every turn and bend, how brood it was, how deep, where the rapids were and where the falls were? But no one took the journey.

No one wanted to experience the journey themselves!

Dalai Lama

A Sufi Story – A story that reminds us that the wisdom of locals always exceeds the knowledge of the experts

The village elders had failed time after time to resolve a difficult problem. They invited a very wise person from another village to come and help them. In time, she came. People gathered to hear her wisdom. She asked them: “Do you know what I am going to tell you?” In unison they responded, “NO”. The wise women replied, “You will only learn what you already know, and if you don’t know, I am leaving.” She left. The village was in an uproar.

Months passed and the problem didn’t go away. The elders debated and issued a second invitation to the wise women. In advance of her arrival, they coached the villagers.

When the woman arrived the second time, the village gathered. Again she asked, “Do you know what I am going to tell you?” The villagers shouted in unison, “YES”. She stared at the people. “If you already know, then I have nothing to tell you.” She left.

The village became even more frustrated, but after many months, the issued a third invitation. This time they were ready for the wise woman

“Do you know what I am going to tell you?” Half the villagers shouted “YES”; the other half shouted “NO”. The wise woman looked at the people and said, “Those who know should now get together with those who don’t; and then you will all know.”

She rose left and never returned.

That night, an elderly woman had a dream. “Last night, a voice told me the meaning of the message from the wise women. She wanted us to know that really important knowledge can be derived from our own community and our traditions, not from outside experts. We already have the knowledge. We already know that the wisdom of locals will always exceed the knowledge of the experts. We just don’t have the confidence to believe in ourselves.”

What Matters Most?