How Lack of Capital Can Drive Innovation

“You shouldn’t wait for change—you should pioneer it,” said Paul Block, CEO of Merisant, the company that makes the sugar substitute Equal, and his remark pretty well summed up the theme of last Thursday’s conference session, “Growth and Innovation: Leveraging the Momentum.” A standing-room-only audience attended the panel discussion, in which Block was joined by serial entrepreneur Howard Tullman, CEO of Tribeca Flashpoint Digital Media Arts Academy, and Lisa Price, CEO of Carol’s Daughter, a cosmetics company she launched 18 years ago while working as an assistant writer on “The Cosby Show.”

Perhaps the best illustration of Block’s precept came from Price. Four years ago, she said, she and her management team had detected early signs of a major change in the tastes and preferences of their customer base, principally African-American women. The company responded by developing a range of new products, including its first celebrity fragrance, My Life by Mary J. Blige. The problem was that Price didn’t have enough capital to launch the product in the traditional manner, through department stores, which was how every other cosmetics company did it. What she did have was a following on the Home Shopping Network. She decided to launch it there. It was a huge risk. If the gambit failed, the product might never recover. “I remember thinking about it a couple of weeks before, and asking myself, ‘Am I crazy?,” she said. But she went ahead—and wound up selling 60,000 units in a couple of hours.

Asked what had given her the confidence to believe she could succeed, Price said, “I didn’t have a choice. I didn’t have any money.”

It was, someone pointed out, a perfect example of the way that lack of capital can drive innovation, as well as its corollary: Having too much capital is often more dangerous to entrepreneurial businesses than having too little.

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charity:water CEO Lands Huge Commitment from Inc. 5000 CEOs

charity: water CEO, Scott Harrison, a nightclub promoter who transformed himself into one of the hottest not-for-profit entrepreneurs of our time, had Inc. 5000 Conference attendees on their feet this morning, pledging to “give up” their birthdays in support of his organization.

It was a morning filled with stories of personal transformation–from the likes of Russell Simmons, General Stanley McChrystal, and Ric Elias, who was on Flight 1549, the “Miracle on the Hudson” flight.  But Harrison’s tale was perhaps the most dramatic. 

A New York City nightclub promoter who lived to flaunt his Rolex, his super-model girlfriends, and his ability to get companies like Budweiser and Bacardi to pay him $2,000 a month to drink their brands in public, Harrison woke up one day and “realized I was the most morally, spiritually, and emotionally bankrupt person I knew.”

He signed on with a not-for profit that sent doctors to Liberia to do pro bono surgery on people with severe facial deformities. Harrison photographed the patients before and after surgery (the not-for-profit actually required him to pay $500 a month to work for them). While working in Africa, he became acutely aware of the devastating impact the lack of clean drinking water had on communities. “I learned that a billion people in the world didn’t have what I took for granted every day of my life,” he said.  “And it’s entirely solvable problem.”

Harrison decided he was the one to solve it and he went back to New York City with “my heart on fire. I wanted to solve the water problem but I also wanted to reinvent charity.”

He decided to take a three-pronged approach with charity: water.

 He pledged to find a way to put 100 percent of donations into water projects, such as digging wells in impoverished villages.

 He’d provide proof of where donations were going by sending donors pictures and showing them the projects using Google Earth.

 He’d create an “epic brand” to differentiate charity: water and to gain support from the media and high profile donors.

Harrison kicked off his campaign by throwing himself a birthday party, charging $20 at the door and donating all the proceeds--$15,000--to his new not-for-profit. Product sales, PSAs that ran for free on American Idol, and social media awareness put the charity on the map. And when Harrison could not make payroll because of his commitment to devote all donations to water projects, Bebo co-founder Michael Birch donated $1 million in 2009 to keep charity: water afloat.

Since then, high profile supporters like Saks, NASDAQ, and premium whisky maker Macallan have helped drive the not-for-profit’s success. But it’s Harrison’s grass roots campaign that has really taken off:  he asks individual donors to “give up” their birthdays by asking their friends and social media contacts to donate a dollar amount equivalent to the age to charity: water. 

So far, 9,500 people have done just that, including celebs like Seth Godin, Will and Jada Smith, and Justin Bieber. The charity has raised $43 million to finance 4,200 water projects, serving two million people in 19 countries. “We’ve been growing between 80 and 100 percent a year,” said Harrison.

Now, Harrison is starting a new, even more ambitious campaign with the goal of providing clean drinking water to 100 million people within the next decade. “We need to raise two billion,” he says.  He’ll start by helping to finance the purchase of drilling rigs for a water project in Northern Ethiopia. And it looks like the vast majority of conference attendees will help him out. At end of his talk, Harrison asked all who were willing to “give up” their next birthday for charity: water to stand. Suffice to say that most seats were empty!

For more information about how you can donate, check out the charity:water website.

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Is War a Good Analogy for Business?

Michael Robbins, the editor of Military History, took the stage this afternoon at the Inc. 500|5000 Conference to discuss Sun Tzu's 2nd century classic, The Art of War.

"There is a metaphorical connection between warfare and other human endeavors," Robbins said. "There are serious lessons to be learned."

Robbins is hardly the first to make the connection between war and business. Mark McNeilly's book Sun Tzu and the Art of Business, famously outlined six management principles from the text, including: "Capture your market without destroying it;" "Avoid your competitor's strength, and attack their weakness;" and "Use speed and preparation to swiftly overcome the competition."

At the same time, Robbins cautioned against making the leap from war as a metaphor for business, and war as a reality for business.

"There is a distinction," he said. "Subjugating and killing one's enemies is not proper conduct when applying it to one's customers."

"Although I don't know your businesses," he joked.

What do you think? Is war an appropriate analogy for business, or does it make you uncomfortable to think about business in terms of violence? Let us know in the comments section below.

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Scott Harrison: Why Charity Shouldn't Be About Guilt

Several years ago, Scott Harrison had the sudden realization that his life up to that point had been a sham.

This is where Harrison began his story, as he took the stage at the Inc. 500|5000 Conference. Both his personal story and the story of what his non-profit organization charity:water does (bring clean water to the developing world) was one of the most moving talks of the conference so far and had many entrepreneurs in the audience tearful.

That feeling he described, he told the room, was the result of spending years working in the New York City club scene as a promoter.

"Budweiser paid me $2,000 a month to drink Bud," he said. "Bacardi, the same. I was paid to drink. I did drugs and gambled. I realized on that beach that I was the most emotionally, spiritually, and morally bankrupt person I knew."

What'd he do about it?

"While I was hungover during the day, I started reading the Bible. That was an interesting push and pull," he said, laughing.

It was through this spiritual awaking that Harrison decided to clean up his act. He signed up to volunteer with doctors going to Africa to provide free surgeries to underprivileged people with deformities . A year into this volunteering journey, he found the one underlying issue for so many of these deformities that he could do something about: dirty water. This was the birth of charity:water.

Harrison's visual presentation showed graphic, moving images of the devastation caused by dirty, disease-filled water. Children drinking muddy water from bottles. Mothers struggling to carry huge jugs of water. And even though the message was serious, Harrison had a knack for lightening his serious message with a joke here and there.

From an entrepreneurial standpoint, he had an early guiding principle.

"I knew from the beginning that this couldn't be about guilt. You can't guilt people to give," he said. "It had to be about opportunity. I had to find a way to get real people, selfish people like me, to invest in this cause."

Harrison revealed to the crowd the three things he set out to do with this charity--all of which, he says, most charities lack. 

1. Find a way to give 100 percent of the profits to the actual cause. 

2. Proof: Make it completely transparent where the money goes.

3. Build a brand.

Today, having met those three objectives, the organization has funded 4,200 water projects with over $40 million in donations. He's convinced not only everyday people to donate money, but huge brands like Saks Fifth Avenue to help out in some way. For more information about how you can donate (which Harrison encouraged the crowd to do), check out their website.

 

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Ric Elias: How Facing Death Changed My Life (And My Business)

Ric Elias was sitting in seat 1D of U.S. Airways Flight 1549 on January 15, 2009 headed to Charlotte, North Carolina, when a flock of Canadian geese collided with the jet, sending the engine into a ball of flames.

"When the pilot said, 'Brace for impact,' I knew my life was over," said Elias, the CEO and co-founder of Red Ventures, a marketing firm in Charlotte, North Carolina. "But I was given a chance."

Of course, as we know now, 57-year-old Capt. Chesley B. "Sully" Sullenberger heroically took the plane down into the Hudson River in what would later be termed the "Miracle on the Hudson."

As Elias recovered from his near-death experience, he knew some things in his life must change. 

"I thought, why do I waste so much energy on the things that do not matter, with the people that mattered the most?" he said.

Now, Elias lives life by these three simple credos:

• Things can change very fast. Live in the present. 
• Choose happiness over righteousness. 
• Above all, find what matters the most.

Elias also knew that things had to change within his company, namely, his fear of failure in trying to scale the company. Since the plane crash, he's more than doubled his staff.

"I needed to let go of the fear of failure," he said. "In every employee meeting, I try to create a global consciousness of how lucky we are. We've become a very happy company."

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5 Keys to Business Happiness

At yesterday’s morning session at the Inc. 500|5000 Ted Leonsis discussed the difference between success and happiness. As a young entrepreneur he sold his magazine to a larger company and “declared victory.” But that didn’t translate into happiness for him. “I sold my company and I didn’t feel happy – I felt like I sold out. Is this the process? Is this what it’s supposed to feel like?”

The next thing that happened was worse - on a terrible plane ride where the flight was forced to make an emergency landing, Leonsis negotiated with the Almighty. “If I get through this, I promise I’ll leave more than I take. I made it off the plane, and I was changed, but I didn’t know how.” He then described how he tried to bring more happiness into the world of business.

His five key points for happiness:

1.    Be an active participant in multiple communities of interest. “Being comfortable in many communities and being a connector is vital. The most successful product I worked on at AOL was AIM (AOL Instant Messenger.) It really invented social media and viral marketing. We never spent any money marketing it.” The product helped customers connect to their communities of interest.

2.    Have high levels of personal expression. Leonsis blogs daily at Ted’s Take. “Companies that allow employees to have high levels of personal expression, and which allow their fans to do that as well are successful. We have the biggest blogosphere around our team. One of our fans comes to every game in a space suit. The more self expression, the more sales – the Capitals had sell outs their last 4 seasons.”

3.    Have a high level of personal empathy. Leonsis promised fans the Verizon Center would be the cleanest, most high tech facility around. But he hadn’t consulted with the cleaning crew. So, after President Obama visited a Mystics game, Leonsis stayed and cleaned the stadium. Eighteen months after cleaning the ladies room and mopping the stairs, no one talks about the President’s visit, but they do talk about the night the boss cleaned up.

4.     Be grateful and give back. “The act of giving back really moves you up in happiness,” said Leonsis.

5.    Articulate and believe there is a higher calling. “Not many people know their own higher calling is," states Leonsis. "The Dalai Lama came to the Verizon Center last year, and told people “Your journey is to find happiness.” We enjoyed our conversation, because it was the first time he had heard how business can make people happy, and that companies that generate happiness can increase value.”

Many of these ideas are covered more fully in The Business of Happiness: 6 Secrets to Extraordinary Success in Life and Work which Leonsis authored in 2010.

As a final thought, Leonsis said “We’ll all have reckonings. From that reckoning, you pivot and do something positive. I was programmed to be successful, but I went to the Library of Congress and read the Declaration of Independence, and they have all the draft versions as well. Every red line version had the same line about Life, Liberty and the pursuit of Happiness. So, our country is based on happiness. The second part of my career has been about making businesses happy.”

How do you incorporate happiness into your business for customers or employees? Let us know in the comments.

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Conference Life: Cocktail Party Impacts Early Morning Yoga Attendance

The last day of the Inc. 500|5000 conference in Washington D.C. kicked off with a little yoga. 

But after a lively circus-themed cocktail party last night, only 16 of the 40 or so CEO's and entrepreneurs who registered actually showed up at 6:30 a.m. for the session. (It seems, the turn out for yesterday's outdoor run was much higher.)

Among the sweaty, mostly-female crowd, was Mary Lorenz, who works with CareerBuilder.com.

"I think people had fun last night," she said. "Which means less people here. But that's okay. I feel really great right now--awake."

Other early bird activities at the Gaylord Hotel in Washington, D.C.? The Inc. Marketplace, a mall of company booths including Google and Dell, was buzzing with people setting up for the last day.

And whereas yesterday morning, the marketplace was packed by 8 a.m. with entrepreneurs and CEO's networking and chatting, today, the vibe is much like the yoga class: Easy does it. 

Also spotted: Serial entrepreneur and the day's most anticipated speaker Russell Simmons, strolling the hall, preparing for his time on stage.

 

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Are You Living the American Nightmare?

Jessica Herrin, founder and CEO of social selling website Stella & Dot, kicked off the last session of the Inc. 500|5000 conference Friday with a high-octane talk on finding balance. Her company hosts independent makers and sellers of boutique-style jewelry and accessories, or as Herrin put it: "I created a platform for balance for other entrepreneurs."

Is it odd for a self-proclaimed frantic, over-worked entrepreneur to create balance for her peers? Not to Herrin. As the co-founder of her earlier venture WeddingChannel.com, she had been on the frontlines of a tech start-up and knew what entrepreneurs needed.

"I was 24-years-old, worked all the time, and I didn't care," she said. "Other people would come to me and say 'I want to be you.' I was like 'No! This is not the American dream; it's the American nightmare!"

She decided to start Stella & Dot, which now sees $100 million in revenue since its founding in 2007.  Herrin had some quick takeaways for entrepreneurs looking for more balance in their start-up.

The highlights:

- Stay curious and nimble. Herrin said change is inevitable, so surround yourself with people that respond well to change. 

- People are everything. She said networking and building a strong support system will lead to a more balanced company. 

- Hire people with mental fortitude. "Mental stability is underrated," she added. 

- Love your life. "You have to show strength and conviction in your company," she said. "If you wouldn't do your job for free, entrepreneurship isn't for you."

 

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