Transcript
When we talk about social entrepreneurship, we often compare it with entrepreneurship or normal entrepreneurship and we assume that there’s a difference in passion or purpose of the entrepreneur. So we think that normal entrepreneurs are interested in money only and social entrepreneurs are only interested for the societal benefits. However, many entrepreneurs are not starting a company because of money, but because they are just extremely passionate about what they’re doing. And similarly, social entrepreneurs are not just interested in societal benefit but are also interested to make a living. So I believe the true difference between entrepreneurship and social entrepreneurship is in the value proposition and/or the target audience that you are targeting with your product. For the entrepreneur, the product or service that is designed, targets markets that can comfortably afford the product or service and thus is created for financial profit. Whereas a social entrepreneur creates a product or service for a large scale transformational benefit of society and often this is targeted at a part of the society that can actually not afford the solution.
The same as it is as if you were a normal entrepreneur. The only difference is is that you have an additional focus on solving a problem in a society often for a population that does not have the money to pay for your solution. And although not all social entrepreneurs are for profit businesses, you always need to make sure that you have enough money to grow and maintain the work that you’re doing. For social entrepreneurs it is often more difficult than normal entrepreneurs as your payer of your services is not necessarily the same that benefits of your product or service.
I guess entrepreneurship was always in my path that that’s what I wanted to do. What I have however found out at one point is that getting out of bed and putting so much effort and energy into a startup for a audience that already has everything and where you do not really add a benefits, started to bug me. So for me, my passion really became like, how can I with all the time and effort that I put in, improve something in society and in my case, how can I make healthcare more equal and accessible for everyone? So that’s really how my passion is related to what I’m doing right now.
First of all, there is a social purpose business that wants to solve a social issue. So the core value proposition is about solving a social injustice in the world. Secondly, there are social purpose businesses that are also interested in helping to solve a social injustice. So here the core value proposition might be for a wider market, but for example, the organization also supports a social cause. Both companies are for-profit and both add tremendous value to the world. But the core difference is really where is the core value proposition targeted at.
So, for example, you have social businesses, which core value proposition is focused at solving something in a community. For example, installing new toilets in a slum in India. So that’s a social business where the core value proposition is linked to solving an injustice. Similarly, you also have companies like for example, Patagonia or Toms where core value proposition is comfortable clothes or shoes, however they reinvest their money into communities that really need it. So this is an example where the core value proposition might not be social, but they’re very interested in also investing in a social cause.
The story behind social entrepreneurship
Muhammed Yunus is a pioneer of social business. He is a Nobel Laureate, founder of Grameen Bank, and authored several books on microfinance and social enterprises. He coined the term social business, a company that either creates income for the poor or provides them with essential products and services such as healthcare, safe water, or clean energy.
Nobel Laureate, the founder of Grameen Bank, authored several books on microfinance and social enterprises.
For Yunus, social businesses operate like normal companies BUT with some differences:
- A social business solves a social problem.
- Unlike a charity, a social business generates profit and aims to be financially self-sustaining.
- They reinvest profits back into generating impact.
What is Grameen Bank?
In 1983, Yunus founded Grameen bank, where he led the way to a microfinance revolution for which he won the Nobel Peace Prize for. Grameen grew from a bank into several enterprises, each dedicated to serving poor rural communities in Bangladesh and each created with the specific intention of reinvesting any and all profits back into benefiting the poor. His initiatives were the first social businesses.
Yunus created Grameen because he realized that the most impoverished members of his community in Bangladesh were systematically neglected by the banking system in that no one would loan them any money. Hence, Yunus conceived a new form of banking, microcredit, that would offer very small loans to the poorest people without collateral, and teach them how to manage and use their loans to create successful small businesses.
Through his business, he currently provides $24 billion of micro-loans to more than nine million families. Ninety-seven percent of Grameen’s clients are women, and repayment rates are over 90 percent. Outside of Bangladesh, micro-lending programs inspired by Grameen have developed, and serve hundreds of millions of people around the world.
What is Yunus Social Business?
Yunus Social Business runs a philanthropic venture fund that uses donations to invest in social businesses providing employment, education, healthcare, safe water, and clean energy to over 5 million people worldwide. It was c0-founded by Saskia Bruysten along with Muhammed Yunus and is based in Germany. The organization has also been working with over 20 global corporations to help them use their core competencies to address social problems.
