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Walking the Double Bottom Line:
Entrepreneurs Tackle Joint Social and For-Profit Missions

January 24, 2002

STANFORD GRADUATE SCHOOL OF BUSINESS—There is a growing desire to practice socially responsible entrepreneurship, but no clear blueprint for doing it well, say managers involved in such ventures.

"Especially after the September 11 events, more and more people want to find meaning in their business," said Ben Klasky, the executive director of Net Impact, an MBA network focusing on social missions.

However, it is not easy for an organization to merge the business acumen of the corporate sector with the conscience of nonprofits, he added. "We need to get the best of both worlds, rather than the worst."

Klasky, a Stanford Business School alum from the MBA Class of 1998, was part of a Jan. 24 panel on responsible entrepreneurship sponsored by the School's Center for Entrepreneurial Studies and Public Management Program, and by the Stanford Entrepreneurship Network. While the four guests spoke with passion about their organizations, all were quick to acknowledge that they were still learning how to balance their double bottom lines of profits and social goals.

"I don't think there's such a thing as a truly socially-responsible company right now," said Jil Zilligen, Patagonia Inc.'s in-house environmentalist. "There's no handbook."

Patagonia, a maker of climbing and outdoor gear, donates 10 percent of its profits to green causes. It also gives employees paid leave of up to two months to work for nonprofits of their choice.

By analyzing the "life cycle" of its products, from manufacture to disposal, it tries to limit the ecological harm done by its activities. For example, it uses recycled polyester for some of its clothing.

"We start with the premise that everything we do pollutes, and try to minimize our impact," said Zilligen, the company's vice president for environmental initiatives.

Another challenge for the socially-conscious is deciding just what causes to support, said Jay Coen Gilbert, the co-founder and current chief executive of AND 1. The eight-year-old basketball gear company decided at the outset to give 5 percent of its profits to charity, and eventually found itself supporting more than 200 organizations.

This was a mistake, Gilbert said. "A long list of charities looks good, but it's antithetical to making an impact." This year, AND 1 will instead put aside money to set up a foundation and engage in more focused philanthropy.

The company has also found that funding decisions can be highly contentious—as when it toyed with the idea of a program to match employees' private contributions to their chosen charities. "We got an amazingly negative, visceral reaction," Gilbert said. "The reason was, what happens when John wants to give to Catholic charities and Frank wants to give to Planned Parenthood—you're going to get civil war in your organization."

Another tack was to get local retailers to nominate charities in their region. AND 1 would then match customers' donations. The retailers, Gilbert noted, would have a better idea of local needs.

For entrepreneur Lee Zimmerman, Stanford MBA '94, his choice of social mission resulted from "serendipity". It arose out of his involvement with Juma Ventures, a nonprofit that works with Bay Area youth, and his experience with managing hotel and resort operations for JMB Realty Corp.—as well as with being a camp counselor growing up.

Zimmerman has co-founded First Light, a for-profit company that will develop and run lodges near Yosemite and other parks. Through its partner, Juma, it will train and employ youth from poor or troubled backgrounds.

"We're really trying to prove that a business developed from inception with a social mission can work," he said.

Ideally, he said, entrepreneurs should choose activities that lie at the intersection of what they enjoy doing, what they are good at, and what would make the most impact.

Like the other speakers, he advised socially-minded entrepreneurs to follow their instincts. "It can be paralyzing for folks if they try to wade through all the options that are out there in the world before deciding which is the one thing you should do. At some point, you have to just decide and do it."

—Cherian George

Related Links

Video File, 1:23 hour
Center for Entrepreneurial Studies
Public Management Program