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hello I'm Katherine Klein I'm the vice
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Dean for social impact at Wharton and a
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professor in the management department
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and I am delighted to be here
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interviewing Our Guest Jonathan
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greenblat uh who has an extraordinary
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career in the social impact space every
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every uh venue within that space
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Jonathan you are a senior fellow at
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Wharton and we love having you here you
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are a Serial social entrepreneur with
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lots of experience in the business SE
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you built uh several successful Brands
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including ethos water which many of us
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may know from buying ethos water when
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we're not buying coffee at Starbucks so
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you've had successful exits uh you're an
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experienced corporate executive you
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worked at Starbucks you've worked with
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Google you've been in politics you were
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a member of the White House a director
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of the office of Social Innovation and
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civic participation at the White House
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until quite recently uh and you will
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soon take the role as National director
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or CEO of the Anti-Defamation
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League so this is business government
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nonprofits uh and uh I I think today I
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want to focus on this this title we've
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we've said this your experience as a
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serial social entrepreneur and talk
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about the business of social impact sure
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you want to start with uh when you think
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of yourself and you get this you're
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obviously comfortable with a label
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serial social entrepreneur let's start
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with what's a social entrepreneur so I
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think about a social entrepreneur based
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on a definition that was laid out many
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years ago by Sally osberg of the skull
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foundation and Roger Martin who's the
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dean of the rotman School of Business uh
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up in Canada I think about a social
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entrepreneur is someone who tries to
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create change through a market-based
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approach that's about taking direct
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action so not necessarily lobbying or
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doing advocacy but Lally going in and
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creating something that is trying to do
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so in order to create or let's say fix a
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broken disequilibrium so it's not
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someone who's trying to do something on
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the outside that isn't causal but
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instead trying to create systems change
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and repair a difficult societal ill so
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the social entrepreneur creates direct
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action to fix a broken system for profit
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necessarily I think it can be both so I
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think you can see social entrepreneurs
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in the nonprofit space who use that sort
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of model to attack a particular issue in
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a field it could be healthare could be
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housing could be micro could be Finance
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I'm all I personally am more interested
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in what we've seen in terms of social
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entrepreneurship in the business
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Community okay so let's talk about that
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social entrepreneurship in the business
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community and let's start with uh with
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ethos water you were relatively early in
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this space we've seen a lot of evolution
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what what did you try to do in in ethos
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water talk brag a little bit what have
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been the successes and the the wisdom of
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what you created so ethos Water started
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with my business partner Peter Thum we
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were roommates in business school at
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Kellogg for two years which is a lesson
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for all the young Wharton students out
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there as they think about their
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classmates uh Peter had this idea of
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creating a bottle of water that would
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use part of its profits to fund
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humanitarian water projects as we
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initially thought about it he thought
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about it initially over time we we then
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started the company and over time our
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model evolved and when did you start the
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company we started Pete started working
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on it in 2002 and we came together in
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late 2002 m 2002 and when did you sell
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the company to Starbucks we sold it in
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April of 2005 so fast fast yeah pretty
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fast it's funny you see this pattern of
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starting scaling and selling on a pretty
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rapid time frame in Silicon Valley all
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the time right in cpg or in other kind
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of categories it's a little less common
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right nonetheless the model was
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predicated on this notion that we could
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connect consumption to the cause so if
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you look at the first generation of
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social Enterprises in the business world
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businesses like Ben and& Jerry's yeah or
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Body Shop yep or Stonyfield Farms here
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you had products and brands that were
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about ice cream or about yogurt or about
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you know uh
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hand like hand cream lotion personal
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care products right that were not
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necessarily tied to the causes they
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sought to address they were organic
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healthier may have had better supply
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chain more that's right right that's
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right they they they aimed in that like
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I think you know Ben and Jerry's didn't
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use recombinant Bine growth hormone
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right right but now consumers didn't
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understand that and the body shop
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aspired to do things with better sourced
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inputs from the Amazon but again
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consumers didn't understand that we
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thought consumers would understand this
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basic idea of bottled water which is
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kind of an irrational category to begin
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with connecting its consumption to clean
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water issues it's a huge Global problem
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so what's gotten more familiar and there
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is a a one for one model so so people
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may have heard from of a one for one
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model we see that in Tom shoes perhaps
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most famously you know and and I know
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they've evolved their model but it was
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hey hey consumers you know buy a cool
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pair of these shoes and we will donate a
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pair of shoes right so ethos water it's
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a little bit of a different it wasn't
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hey hey hey uh buy a buy a bottle of
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water from Starbucks previously you and
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we will donate a bottle of water
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elsewhere what what was it so our notion
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was if you buy this bottle of water we
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initially aspired to donate up to 50% of
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our profits to fund humanitarian water
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programs around the world now I say
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programs because it wasn't just a
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project or that kind of Hardware like a
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like a new
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latrine instead or or a new uh like well
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and that matters but the hardware is no
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good without software so we also sought
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to do hygiene education and to create
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sort of economic schemes that would make
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the water system sustainable yeah so
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that approach is really different than
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saying I'm going to invest in a
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community here in order to create an
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ecosystem around water is very different
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than saying we'll give somebody a pair
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of shoes but there it seems like it's
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different in at least two ways one is
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right it's a commitment that's around
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we're going to donate 50% of our profits
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not uh you know it's not it's not tied
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to we're each one of our products we're
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selling it's tied to our products and um
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it's not tied to a particular solution
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I'm going to give away a bottle of water
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you had more flexibility more ability to
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change the an ecosystem yeah I think our
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approach so let's take those two things
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starting with the latter I think our
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approach was more strategic and the one
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for one model is often more tactical
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right so we were investing strategically
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versus techically giving someone
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something sure it's more like it's not
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teaching a man to fish it's creating an
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ecosystem around a fishery ecosystem
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better than giving someone a fish right
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but on the on the flip side look I will
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say that I think Toms and Warby Parker
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and these other businesses who are
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endeavoring to do this model I think
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it's admirable I think we should
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encourage them right I would simply say
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I think the model can continue to evolve
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in ways that create more enduring change
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and you know what else connect the
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consumers to the issue more effectively
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though I would argue that can when you
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you know the Simplicity of the hey buy a
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pair of shoes and we'll give a pair of
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shoes away uh may not be the right
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solution and I know Toms has has been
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criticized and has evolved their their
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model but from a consumer perspective
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it's it's very concrete very clear well
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now you're kiding something of the key
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so the consumer wants to understand hey
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I do this what happens yeah so our
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slogan was every bottle makes a
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difference helping children get clean
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water right simple I buy this water
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someone gets water but the fassil I buy
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this water we give someone a bottle of
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water that's crazy right and so we we
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thought it would be more respectful of
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the consumer's intelligence right to
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have a model that was honestly more
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intelligent and smarter with that said
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um I do believe that Toms and Warby are
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evolving their approaches absolutely to
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accommodate for what is the complexity
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of the issues and as a consumers as
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consumers awareness has increased their
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expectations have increased and they
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demand more from these Brands than just
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oh I buy it you give it away right right
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so you know you started this company by
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the way you know Tom's didn't start you
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know who started this model Nick Negron
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started this model remember the one
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laptop per child oh yeah sure the way he
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went to Market out of the digital Lab at
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MIT and he had a great partnership with
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companies who helped you buy a laptop
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initially he was going to give them away
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and then he realized you buy a laptop
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here we'll give one away over there yeah
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yeah very interesting so if that's the
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start of the one for one model and your
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your company was an early social
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Enterprise what are you seeing in the
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space as you look at the new ways that
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businesses and let's stick with that the
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business enterprises the new ways
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businesses are engaging in social impact
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whether you want to be thinking about
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social Enterprise or corporate social
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responsibility or the places they're
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they're blending what are you seeing
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that you think this is interesting and
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and there's potential here if we can
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grow this in the bus sector what's
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interesting I think is you certainly are
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seeing lots of innovation in the supply
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chain or the value chain more and more
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give us an example well more and more
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businesses are using um more sustainable
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Supply chains so think about a business
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like um oh I don't know like a so Tesla
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be an example right so it's a better
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battery and it's produced in a way that
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makes the car more efficient right we
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hear this a lot about about Nike for
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example exactly so there're interesting
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models where it could be the inputs if
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you will the materials it could be the
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labor force so there are businesses that
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are trying to use labor forces let's say
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overseas and give their workers better
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opportunity even here at home the
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company in Detroit The Watch Company in
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Detroit is doing this whose name I can't
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seem to remember now very unhelpfully
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one watch one I think it's got the word
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one in it but there but there but you're
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starting to see some interesting models
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like that so from it could be the labor
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force it could be the materials it could
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be the way you go to market right like
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using climate friendly vehicles to
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deliver your product if you will or
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something so that stuff the supply chain
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work is interesting and of course there
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are businesses who are doing interesting
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things on the back end V how they give
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away part of their profits right uh I
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think the interesting things are
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happening not in the value chain and in
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the profit distribution but on the front
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end and how these businesses are getting
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created
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and how these business are measuring
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their impact so great let's talk about
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so the first side you know we've seen
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we're here in Philadelphia which is the
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headquarters of blab right the
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organization that has developed this
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interesting model of certifying
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companies right um and you get that cert
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you take their audit and you get that
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certification and you get this B
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Corporation status right or there's
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actually right a distinction between the
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legal status of being a b Corporation a
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benefit Corporation and the
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certification process of of being bab
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certified and and the you know just to
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clarify the bab certification is
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assessing uh multiple aspects of the
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company right what is its Workforce what
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is its Mission what is its environmental
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impact and so on in all the ways this
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could be a mission driven company it's
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exactly right so their certification
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process is what's interesting to me
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because we're seeing all kinds of
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businesses start to adopt this
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businesses you might not expect
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consulting firms an example like or
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different companies who really don't fit
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the Ben and Jerry's Tom Sho ethos water
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model right um now as you were saying
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we're now starting to see policy catch
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up with this as different states are
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accommodating for and allowing
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businesses to incorporate as for benefit
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companies right using in many case some
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of the stuff of the B Corp um
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certification process so that's very
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interesting because as we see more and
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more businesses take those princip and
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put it into their Charter right make it
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part of the way they serve not just make
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it explicit part of their value
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proposition to serve stakeholders as
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well as shareholders that's really
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different and that flips Milton Freeman
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on its head right so that's neat and
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then kind of related to this becomes the
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way that we measure value so let's let's
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pause for a moment I want to get to
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there but I know one of the questions
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that that um you know that I've heard
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about this B certification is okay this
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B certification and if you believe in
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these social missions you believe
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businesses can do this this is good and
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yeah we kind of know that that consumers
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may be interested but the vast majority
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of these companies uh are are private
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companies a few of them have gone public
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um or been acquired uh but one of those
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question marks out there is what happens
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when they go IPO right did you know will
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people look at this company and say wow
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we want to invest like crazy this has so
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much of a social Mission and an economic
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Mission or will they will they say
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H that's nice economic Mission probably
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just okay given the social what are the
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assumptions that investors may have in
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their heads about a company that's
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Mission driven you know B certified and
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is it worth investing so that's it's an
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interesting question I don't think we
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know the answer yet you know today as
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the day we're recording this Etsy just
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filed for they filed for the public
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offering 90 days ago they're going out
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today they'll start trading today we'll
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see how we'll have one case at least and
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there's another firm there's email
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marketing firm in North Carolina that I
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think is out but Etsy will be the most
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prominent public Equity with the B
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status yeah so that's fascinating see
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how it plays out when there are
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questions in the boardroom shareholders
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versus stakeholders when there are
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questions in the annual meeting
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shareholders versus stakeholders who
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wins right hard to say right um so I
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think we're going to work those things
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out on the other hand we do have lots of
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big companies who aspire to be better
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for the world and don't even have that
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status right so think about Google for
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example yeah sure Google's been very
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explicit with their don't be evil Mantra
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they don't have B certification and they
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are trying to maintain their line now
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the way they've done it right is with
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the different the different classes of
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stock and the the controlling stock if
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you will is owned by the founders Sergey
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and Larry I think maybe Eric Schmid but
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all of the shareholders the common
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shareholders don't have the controlling
00:14:20
stock that they do right so they
00:14:21
continue to make the Strategic decisions
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for the company because of these two
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classes of of equity right and Whole
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Foods would tell you I know we've been
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we were recent speaking with the co-ceo
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Walter Rob I mean he was very explicit
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hey our purpose comes first and our
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profits follow and very much sees the
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mission driven elements of of Whole
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Foods Howard Schultz would say the same
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thing as Starbucks right sure right um
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you know we see other corporate leaders
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beginning to adopt a similar Mantra you
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know Richard Branson has started his
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thing called the B team with corporate
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CEOs who are trying to Aspire to similar
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a dual mission where
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purpose theoretically comes before
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profit yeah now on the other hand if you
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don't have any
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profit got to be very right so so it's
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it'll be inter profit allows you you
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know in the ideal world what we hope
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we're seeing in this space is that the
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profit drive a virtuous cycle right
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that's right profit purpose drives
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profit drives purpose but we come back
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to this question that you raised earlier
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which is you know as we see companies go
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public and there are shareholders
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getting involved how does that actually
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play out
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what are the pressures upon those buses
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and then you wanted to talk about the
00:15:33
other end of the spectrum oh measurement
00:15:35
so I think ultimately and this may
00:15:36
answer the first question as firms are
00:15:39
beginning to develop integrated models
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to actually measure not just their
00:15:43
financial performance but their sort of
00:15:45
social environmental right Etc
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performance so out of that b
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certification process has come something
00:15:53
called gears right which is a
00:15:55
measurement system which is quite
00:15:57
interesting um M gears it's the impact
00:16:01
in global impact investing rating system
00:16:05
right and that is being applied right
00:16:07
now to funds yeah to evaluate their
00:16:09
portfolio right and I think what's
00:16:12
meaningful about that is it's creating
00:16:15
the conditions in which these fund
00:16:16
managers are looking at their portfolio
00:16:18
of investment say how do we perform
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right and by the way that may be one of
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the most interesting things about blab
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is not the thousand plus companies who
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now have the certification right far
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more businesses have taken the self-
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audit right the fact that they've
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created the conditions in which
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entrepreneurs and Executives managers at
00:16:37
all levels are thinking about these
00:16:38
issues that alone is a contribution I
00:16:40
think to the to the National
00:16:41
conversation right yeah know i' I've
00:16:43
heard the founders speak essentially
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it's like a checklist that says huh I'm
00:16:47
not eating enough enough vegetables am I
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right you know they're they're
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reflecting on that yeah it's like a food
00:16:53
plate of uh firm performance isn't it
00:16:56
right and the impact measurement piece I
00:16:57
think is is a really important piece to
00:17:00
come to in this conversation because um
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you know as as you know when we've
00:17:05
talked about this in the in the past
00:17:07
there's such there's so much that's
00:17:08
inspiring in this in this space but
00:17:10
there are parts that are worrisome right
00:17:12
that companies may come on board without
00:17:14
a genuine commitment to social impact
00:17:17
without careful evaluation of what
00:17:19
they're doing and without uh
00:17:22
accountability to create an impact and
00:17:24
there's you know potential for abuse I I
00:17:26
fear down the line as this as these kind
00:17:29
of business become businesses become
00:17:31
more and more common so the commitment
00:17:34
to impact assessment and accountability
00:17:36
and transparency about this is what
00:17:38
we're doing this is what the real impact
00:17:39
of our business is would seem to be a
00:17:41
really important Safeguard it's
00:17:43
absolutely crucial it's crucial for a
00:17:44
couple reasons so number one although I
00:17:47
think Millennials in particular maybe in
00:17:49
part because of social media they can
00:17:51
sniff out what isn't
00:17:53
authentic um so brands that aren't
00:17:55
really you know True to this are often
00:17:58
exposed yes um so that is a bit
00:18:02
qualitative but on the quantitative side
00:18:04
if we ever really hope to bring Capital
00:18:06
into this field at scale if we hope to
00:18:08
do the kind of comparative analysis that
00:18:10
makes gives us the ability to analyze
00:18:12
those public equities like we were just
00:18:13
talking about so you can compare whole
00:18:15
foods' performance to superv value or to
00:18:17
Kroger's or to Albertson's we need a set
00:18:20
of common measures by which we can judge
00:18:21
their performance on something other
00:18:23
than EPS right um so I think it's
00:18:26
important for that reason and then
00:18:28
thirdly because because if we really
00:18:30
hope to create change at scale we need a
00:18:33
discipline and a rigor um around
00:18:36
measuring you know quarter on quarter
00:18:38
year on year how we're making progress
00:18:40
on key metrics so you know you manage
00:18:43
what you measure sure so the Advent of
00:18:45
measurement systems I think augur well
00:18:47
if we want managers to be focusing on
00:18:49
this great Jonathan it's been fabulous
00:18:52
talking with you we need to uh pull this
00:18:54
to a close even though we could keep
00:18:55
talking for hours I know so great do it
00:18:58
again I hope so and great insights on
00:19:00
the you know the business of social
00:19:01
impact thanks thank you being with us
00:19:10
[Music]
00:19:25
thanks
