H2Oscore is a Milwaukee startup that is helping communities meet their water conservation needs. In Part I of this series, McGee Young, Founder of H2Oscore, described the benefits of Water Council membership and the birth of the company. In Part II, Nathan Conroy, the Senior Entrepreneur at H2Oscore, describes the concept of social entrepreneurship and how it informs the H2Oscore business model.
I was recently asked to explain the difference between a social enterprise and a non-profit. More specifically, could a company like H2Oscore really stay true to a social mission if it answered to customers and investors rather than to a non-profit board? It’s easy to understand skepticism of the private sector, and especially to question the motives of those who work in the for-profit world. When I got the reading list for my first course at Marquette’s College of Business I only expected to see titles along the lines of Make Money Fast or Capture the Market Before your Competitors.
However, the business world is changing and no longer fits stereotypes of singular profit motive. Much to my surprise, the book on the top of the course list was Blake Mycoskie’s, Start Something that Matters.1 This book is the personal story of Mycoskie, the founder of TOMS shoes, who witnessed the debilitating consequences of inadequate shoes on poor children in Argentina. In just a few years, TOMS has become one of the fastest growing companies in its industry (try walking around your local college campus without spotting a pair). At the same time, TOMS demonstrates a model for solving a major social problem on a scale and pace normally associated with a high-tech startup. TOMS achieved their impressive results through an innovative “ONE for ONE” business model: for every pair of shoes purchased, a pair is given to a child in need. I saw this happen first hand when TOMS delivered shoes to the children at a Honduran orphanage where I was a volunteer.
TOMS model isn’t simply a large charity donation program dressed-up like business, nor is it just a greedy corporate marketing ploy sold as altruism. TOMS is an example of social entrepreneurship, the innovative leveraging of market mechanisms as highly efficient and sustainable vehicles for addressing societal challenges. Gregory Dees of Duke University’s Fuqua School of Business describes social entrepreneurship as combining a “business-like discipline, innovation and determination” with a social mission that is passionate, explicit and central.2 In other words, the business models created out of social entrepreneurship, sometimes referred to as “social ventures,” combine hybrid for-profit revenue models with not-for-profit goals.
My encounter with social entrepreneurship at Marquette was no accident. Marquette is one of only 19 universities — including Brown, Cornell, Duke, John Hopkins, and Arizona State — identified by Ashoka as a “Changemaker Campus”: one featuring robust investment in talent pipelines connecting student leaders and careers in social entrepreneurship. “We need to reverse three centuries of walling the for-profit and non-profit sectors off from one another,” says Bill Drayton, the founder and C.E.O. of Ashoka.
“When you think for-profit and non-profit, you most often think of entities with either zero social return or zero return on capital. Clearly, there’s some opportunity in the spectrum between those extremes.”3
Inspired and supported by Ashoka, as well as other regional organizations like the Water Council, H2Oscore follows a social entrepreneurship framework. We find inspiration from stories like San Francisco’s successful program to reduce sewer back-ups and energy costs by collecting used cooking grease from restaurants and converting it to bio-diesel. We believe that social entrepreneurship can achieve a replicable community-based path to water sustainability by empowering residents to manage their home water use through more accessible and actionable consumption information, and by building a mutually-beneficial relationship between such residents and local businesses — perhaps their employer — with whom they share that stewardship ethic.
Nathan Conroy graduated with a M.A. degree in Political Science from Marquette in 2012. Prior to that he spent more than two years as a volunteer in rural Honduras. He is certified as a Water Use Efficiency Practitioner by the CA-NV AWWA. Nathan earned a B.A. from the University of Portland and is a native of Corvallis, OR.
1 Mycoskie, B. (2011), Start Something that Matters. Spiegel & Grau. New York, NY.
2 Dees, J.G. (1998), “The Meaning of ‘Social Entrepreneurship.’” Kauffman Center for Entrepreneurial Leadership, Stanford University. Palo Alto, CA.
3 “Q&A: Bill Drayton.” Fast Company. Dec. 1, 2007.