Impact Investment and Inspiring Entrepreneurs | Scott Lawson, SOW Asia
Through this episode of Entrepreneur for Good, I speak with SOW Asia's Scott Lawson, about his experience as an investor looking for entrepreneurs, and organizations, whose mission, and potential to scale, are aligned with their investment thesis.
It is an interview that I feel offers a lot of insight, particularly for entrepreneurs who are looking to learn about the mindset of investors, but is equally interesting (AND VALUABLE) for investors who are just entering the impact investment space.
"Only do this if you cannot do anything else. If there is a burning issue or problem in your mind that keeps you awake at night that you have to address, then by all means do that. But understand that this is extremely challenging, risky, time consuming work and it can often be a lonely journey as well."
- Scott Lawson, SOW ASIA
About the Entrepreneurs For Good Series
Through this series, we speak with Asia based entrepreneurs whose mission it is to bring solutions to the environmental, social, and economic challenges that are faced within the region to learn more about their vision, the opportunities they see, and challenges that they have had to overcome.
It is a series that we hope will not only engage and inspire you, but catalyze you and your organizations into action. To identify a challenge that is tangible, and build a business model (profit or non) that brings a solution to the market.
About Scott Lawson
Scott Lawson is the former CEO of SOW Asia, a Hong Kong based, donor supported charitable organization working at the intersection of social enterprise and impact investing. SOW Asia invests in organizations and people intent on creating positive social or environmental impact.
About Rich
Driven by the belief that change begins with a single step, Richard Brubaker has spent the last 15 years in Asia working to engage, inspire, and equip those around him to take their first step. Acting as a catalyst to driving sustainability, Brubaker works with government, corporate, academic and non-profit stakeholders to bring together knowledge, teams, and tools that develop and execute their business case for sustainability.
Follow Rich
Website: http://www.richbrubaker.com
Facebook: https://www.facebook.com/rich.brubaker
LinkedIn: https://www.linkedin.com/in/richbrubaker
Snapchat: http://snapchat.com/add/richbrubaker
Instagram: https://instagram.com/richbrubaker
Twitter: http://www.twitter.com/richbrubaker
Contact Rich
[email protected]
Full Interview Transcript
I'm Scott Lawson. I'm the CEO of Sow Asia. I've lived in Hong Kong for 16 years. I first came to China in 1981 as a undergraduate student and I've been in love with the Chinese culture and people since then. I came to Hong Kong in 2000 to serve as the pastor of a church. In 2008, I moved over to join the South Asia team.
SOW ASIA
Sow Asia is a Hong Kong based charitable foundation investing in the individuals and organizations that are creating positive and scalable social impact.
Sow Asia was founded in 2009. The founder needed to make a decision whether to establish it as a fund or a foundation. We decided that the focus needed to be on impact, so we chose to establish it as a foundation. As an organization, our priority is impact. We are of course trying to do that through impact investing to create the sustainability and scalability that Asia is going to need to address the big challenges it faces.
INVESTMENT STRATEGY
Sow Asia was founded in the same year, I believe, that the term Impact Investment was coined (2008/2009). So we really were amongst the pioneers in this part of the world. When the term was coined, there was obviously a great deal of the excitement and anticipation around a concept that people were really struggling to put words and ideas to. We've been a part of that development process in this part of the world.
I spent my first two years really traversing China and Southeast Asia looking for investment opportunities. Honestly we struggled to find opportunities that we thought were investment ready. That began, that began a deeper conversation internally to the organization about our relevance and about the impact investment space as a whole. Off the back of that long internal conversation, we made the decision to engage the market at an earlier stage. Really looking at younger organizations that we thought had all things equaled, the potential to grow. But, we're going to need some capacity building support to make them attractive for investment.
Because the space is still nascent here in Hong Kong and in Asia, we have had to cast a wider net in terms of the opportunities we're looking at. We are interested in the environment sector, the education sector and the healthcare sector.
WHO THEY WORK WITH
Sow Asia is uniquely placed as an organization that seeks to both invest, but is also functioning actually as an intermediary helping to bring together supply and demand in a market place that doesn't really yet exist. So on the demand for capital side, we work closely with inspiring and aspiring entrepreneurs who have solutions, have organizations that are creating positive social impact. It's actually the most exciting part of my job and the greatest privilege for me to work closely with these entrepreneurs. Many of whom are young, but as we are seeing, we are seeing more and more mid career people coming into this space and really applying their experience, their abilities to engage the social impact space.
What we try to do is focus on organizations that have reached the proof of concept level. They have a couple of founders, they have a business model, even if we will change it with them. They have ideally some revenue as well.
EARLY LESSONS
Over the past three years, we have worked with closely with over 40 social enterprises. Again, across a number of sectors, the environment, education, healthcare, poverty alleviation. It's hard to generalize about the entrepreneurs. Some of them come from commercial background, some of them come from a more non-profit background. We have learned in the process that both non-profits and for profit organizations can be successful in achieving their mission and being able to scale their impact. So this has been a great learning for us in terms of how we understand and how we can engage them and help them to grow their ability to scale.
INSPIRATION
The Impact Investment space faces a number of challenges. I liken it to the old story about the five blind men and the elephant. We have conversations about impact investing and realize that although people are all using that term, we may actually very well be talking about different things.
So one thing that we have become much clearer on, is the need to not necessarily define that term, but to define what ones intentions are around that term. What is one seeking in terms of a return? Either financial or the impact of social or environmental.
There are a number problems across the globe that we run into again. On the one side, we face a continued lack of demand for Impact Investment capital. That to say we are not really seeing enough investable opportunities coming into the market place. At the same time, we are also seeing a lack of interest and attention and awareness on the supply of capital side. So whereas I see in Hong Kong, a number of individuals who raise their hand and say yes I'm interested in Impact Investing as an investor. In fact, they are really not doing that. The reasons are clear, but I think there is certainly a gap between supply and demand as they currently exist that needs to be bridged. It's one that we are trying to address at Sow Asia, but that I would say is our biggest challenge going forward.
Those who are interested in investing into Hong Kong projects, find that even the most interesting opportunities are limited in their scalability. Hong Kong is a big city, but relatively speaking a small market. So there are have not been a lot of opportunities for people who want to invest locally and scalable impact. The bigger problem, here in Hong Kong, but I think globally is that what the space really needs now to bridge that gap between supply and demand is what I would call high risk, low return capital. Which is something that any rational investor is not going to appreciate or understand. This is why we believe there is a need for what has been called flexible finance, capital that is more philanthropic in its nature that would be that early first loss funding that allows for these enterprises to grow and creates real impact investment opportunities going forward. We have to identify that capital for the missing middle.
IMPACT INVESTING IS DIFFERENT
Potential investors bring to the conversation a number of preconceived ideas about the impact investing space. Especially if the opportunities that they are looking at are self described as social enterprises. Often times social enterprises are understood to mean a lower return financially. So immediately they're considered with I would say, greater suspicion, greater skepticism, unless the investor has said that their intention is to invest in the impact. Most investors in Hong Kong and I think elsewhere are very much interested in the idea of receiving a certain level of financial return as well the impact. But those opportunities haven't come into the market yet.
LABEL & MODELS MATTER
Social enterprise is an umbrella term that can be used to describe a number of different organizations with a number of different purposes. If we're looking at an opportunity that does have the ability to compete and scale in the commercial market, then we would advise them not only to, not describe themselves as a social enterprise, but to build their business model accordingly. In some instances, where the revenue might include earned income, but may also include government subsidies, and rightly so because these are opportunities that require government support, then I think the social enterprise label is more appropriate, if you will.
One of the things we have built into our capacity building work is immediately identifying with the social entrepreneur, what their end game is and helping them to understand a strategy around that end game and to really leave as much as possible, their preconceived ideas about how this should be working just to sent those aside. So often times we find social entrepreneurs have a preference for earned income, which is not a bad thing per say. But again, it depends on what they are trying to achieve, the market which they are trying to operate, the stake holders or clients which they're trying to serve. For instance, a social enterprise that is addressing a challenge around poverty alleviation, we've become clear that most of the models don't work or don't work well. By that I mean they are not scalable.
In Hong Kong, many of the B-C social enterprises struggle to reach sustainability because they're competing against every other coffee shop in town, for example. So we're interested in working with organizations...really rethinking their business models from the inside out. Thinking about b2b models for example. B to G to C business to government to consumer or client. But it means being willing and able to look at everything again including the legal status for a profit, non profit, in light of the end game or the overall strategy objective of the social enterprise.
ADVICE TO ASPIRING ENTREPRENEURS
My advice to any potential social entrepreneur, first of all I would say only do this if you cannot do anything else. If there is a burning issue or problem in your mind that keeps you awake at night that you have to address, then by all means do that. But understand that this is extremely challenging, risky, time consuming work and it can often be a lonely journey as well.
Secondly, I would say that most of the social entrepreneurs we talk to, do have a great passion about their solution and because they have a great passion about their solution, they automatically assume that everyone else also understands the value of their solution. But in fact, you need to demonstrate that. You need to prove that and we will ask you, if you work with us to prove that to us. You make hypotheses about your value proposition, your customers, we want you to prove that to us. I think that is a growing process and a strengthening process for you to get real about where this product would actually be demanded and creates a real value in the market place.
HOW INVESTORS CAN IMPROVE
I would describe my journey with Impact Investing , I would liken it to repairing in the airplane as we fly in it has sort of exhilarating, but also slightly scary feeling at the same time.
When it comes to the Impact Investment community I'm not sure it really exists yet. We have a number of people who have expressed interest. They come to the Impact Investment space with a point of view, a certain mind set. I think we are still trying to understand one another. We're trying to figure out, for example. How we can communicate across different mindsets, across different boundaries. We are also trying to figure out how we can effectively measure social impact in a way that will be necessary if we are going to grow the space.
It's incumbent upon organizations like Sow Asia working with strategic partners, like JP Morgan for example , or the Hong Kong government, to be intentional about building the eco system that I think is going to be necessary to grow the impact investment space. We've done a pretty good job her in Hong Kong about providing support for social
enterprise, investment opportunities from seed stage straight on up. Sow Asia happens to serve the growth stage market. We need to continue the work with investors well.
At the end of the day, my sense where in Hong Kong is that there are a lot of people who are not willing to engage until they understand it and my counter argument is we are not going to understand it until we engage. We are going to need more people who are willing to jump into the space as both entrepreneurs and investors, make some mistake, learn in the process and build the space accordingly.
PAIN OF INACTION WILL DRIVE ACTION
Hong Kong, the city displayed behind me, is one of the most prosperous in the world, in this world. At the same time, nearly one in five Hong Kong residence live below the established poverty line. There are one in five adults in Hong Kong who are not getting enough food to eat every day or experience what we call meal gaps. There are a number of issues in Hong Kong related to poverty, specifically around housing, around healthcare, and around food. Basic services that any civilized city, such as Hong Kong, should be able to provide for its citizens. We need to address those issues.
The other obvious change in Hong Kong is the demographic bulge and the rapidly aging population in Hong Kong as we have seen in Japan and as we will see in China as well. There are currently inadequate facilities for aging, for the aging population and also its not just about healthcare facilities, it's about some of those things that we take for granted. The companionship, battling loneliness and depression. There are a number of places where innovative iterative solutions are really going to provide a huge difference in a place like Hong Kong.
There are a number of complex questions about how we can move the Impact Investment space forward. It may be that its really not going to move forward until the pain of not acting, of not doing because more acute. Whether we are talking about the environment, whether we're talking about the income gap in Hong Kong and China, the education gap, etc. Those problems are only going to increase. The need for Impact Investing is only going to increase as we realize that neither traditional charity or traditional public resources are going to be sufficient to address these issues.
In terms of the first mover, my sense at this point is that the government certainly has a role to play. We've seen private capital expressing an interest, but the first movers are likely to be those who are more philanthropically orientated who can provide that first lost capital. Also, the thought leadership that is required to begin to move this space forward by creating examples that work and really, I think, instilling a new kind of imagination into the minds of people about what is possible through the Impact Investment model.
WHERE IMPACT INVESTMENT IS WORKING
We already know that the Impact Investment model is performing well in particular sectors. The agriculture sector, for example, across less developed countries in Asia and Africa. For example. Its working in clean tech or green tech for opportunities that are perhaps more socially oriented. I think there's going to be a lot more activity and a lot more growth around solutions, innovations with regard to healthcare and education as the cost of education continue to spiral really beyond the means of most people in Hong Kong and that gap opens, I think, you're going to see a lot of innovation around those solutions as well.
The other obvious one for all of us in Hong Kong would be around the environment as well and this is a place where an enormous amount of work is to be done. We two years ago made an investment into a small recycling company in Hong Kong. Really the only company in Hong Kong that is recycling glass sand plastic, believe it or not, and this is a company that is experiencing some growth, but I think in the next year is gong to be well-positions to really grow and create some positive impact in an area of great need in Hong Kong.
STAYING INSPIRED
I've long believed that each of us has really one fundamental binary decision or choice and that choice is between hope or cynicism. And I think it's one that we need to, I need to make almost every day because there's obviously a lot of evidence to suggest that cynicism is well-placed. But I'm a father, I am someone who is attracted to big challenges of someone who fundamentally believes that although the impact investment space isn't working in an optimal fashion yet, it has to work. That it is indeed our only solution that bringing more private capital and investment performance into organizations, movements that are creating positive measurable social impact.
GOODBYE AND GOOD LUCK HONG KONG
I've been at Sow Asia for nearly eight years. I'm stepping down at the end of June to return to the US. I leave with very mixed motions. I'm obviously excited about returning home and being closer to family, but Hong Kong is a huge part of who I am and...I, looking back on my experience, I obviously would have liked to have done more. I would like to have seen more deals done. I now understand that like these extraordinary buildings behind me, there's a lot work that needs to go into building the foundation before the structure can actually come up. I understand that we've actually done a fairly good job at Sow Asia at building the foundation and that's not just us, but our desire, our willingness to work with a number of steak holders in Hong Kong to really develop what I think is a robust ecosystem to support the growth of the entire space.
We face some real challenges. We need more investable opportunities, which requires smart, young entrepreneurs coming into the space as opposed to going into investment banking or other opportunities. That's going to happen. I think they need to know as they come into the space that they're going to be properly supported, they need to do the heavy lifting themselves, but I think they need to know that Hong Kong is a place where if they work hard, if they are true to their mission, that they have a solid chance of actually growing their enterprises.
It's my conviction that great social entrepreneurs need the best support we can provide for them.
Hopefully Sow Asia will continue to do that.
I certainly hope that that is the intention of my successor and I wish him or her all the best.
For more interviews from the "Entrepreneurs for Good" series, check out the playlist here.
Stay tuned for more clips and full interviews in the coming weeks.
Impact Investors and Investments in Asia | Annie Chen, RS Group
Introducing our latest interviewee in the Entrepreneurs for Good interview series: Annie Chen, founder and chair of RS Group.
Before terms like “conscious capitalism”, “philanthro-capitalism”, or “blended values” began floating around in conversation in Asia, Annie Chen was developing a new strategy that has broken the mold in the industry.
Impact investing is about providing the support for others’ endeavors, backing a powerful cause, concept, or innovation. It’s requires the ability and willingness to look beyond short-term growth for a better long-term future.
However, the realm of impact investing opens up another, socially minded approach to business. These investors don’t stop at donations, charities, and fundraising – and especially in China, this kind of outright philanthropy carries a unique set of connotations.
“If enough people actually engage in thinking about how, through conscious and intentional placement of their capital, they can invest in the future that they create… it's only when more people do it that we have a chance of transforming the system.”
– Annie Chen, RS Group
HER JOURNEY IS ONE OF CONSTANT LEARNING, PATIENCE, AND COMMITMENT TO VISION.
About The Entrepreneurs For Good Series
Through this series, we speak with Asia based entrepreneurs whose mission it is to bring solutions to the environmental, social, and economic challenges that are faced within the region to learn more about their vision, the opportunities they see, and challenges that they have had to overcome. It is a series that we hope will not only engage and inspire you, but catalyze you and your organziations into action. To identify a challenge that is tangible, and build a business model (profit or non) that brings a solution to the market.
About Annie Chen
Ms. Annie Chen is the Chair of RS Group, a family office with a focus on sustainability. RS Group makes investments and grants following a “blended value” approach that ensures its total portfolio can make a lasting and positive impact for future generations.
Ms. Chen believes that one of the most pressing challenges of our time is moving the planet and its inhabitants towards sustainability. To align her values with her investments, she has committed her financial resources to socially and environmentally responsible investing. She also dedicates her time and resources toward social and environmental causes with the potential for generating positive systemic change and sustainable development. Believing the potential for change through social entrepreneurship, she is working to enhance the development of social entrepreneurship in Hong Kong and Asia.
Born and raised in Hong Kong, Ms. Chen obtained her BA from Brown University and her LLB from Columbia Law School.
Follow Annie and RS Group
Website: http://www.rsgroup.asia/
Facebook: http://www.facebook.com/rsgroupasia
LinkedIn: https://www.linkedin.com/company/rs-group-asia/
Twitter: http://twitter.com/rsgroupasia
About Rich
Driven by the belief that change begins with a single step, Richard Brubaker has spent the last 15 years in Asia working to engage, inspire, and equip those around him to take their first step. Acting as a catalyst to driving sustainability, Brubaker works with government, corporate, academic and non-profit stakeholders to bring together knowledge, teams, and tools that develop and execute their business case for sustainability.
Follow Rich
Website: http://www.richbrubaker.com
Facebook: https://www.facebook.com/rich.brubaker
LinkedIn: https://www.linkedin.com/in/richbrubaker
Snapchat: http://snapchat.com/add/richbrubaker
Instagram: https://instagram.com/richbrubaker
Twitter: http://www.twitter.com/richbrubaker
Contact Rich
[email protected]
Full Interview Transcript
Annie: My name is Annie Chen. I am the principal of a mid-sized family office that's based in Hong Kong, called RS Group.
For the last six years, we have been on a mission and on a journey. And our hope is to become a catalytic force in transforming our economic system so that it doesn't jeopardize the well-being of the planet or the people, but will actually us towards a path of sustainable development.
Getting Started
Annie: I did have a prior career in life as a tax lawyer. That translated very well when I moved into the family office that my parents set up. And so I was actually bringing my skill set into play by helping my own family create the appropriate legal structures to do a wealth-management setup that would achieve all the goals that family offices are supposed to achieve. A preservation of capital, and good, smooth transition - or smooth succession – plan, and also to do philanthropy.
Six years ago, I think I realized out of many years of working in that larger family office that we never asked ourself the question of “why we were doing it.” We were working under the assumption that “Well, that's what family offices do.” And I decided that there has got to be something more. And I was trying to find the meaning and the values behind doing it.
And so when the opportunity came, and I had to take responsibility for my own portfolio, I wanted to try to come up with a way of managing my capital that is in alignment with my own values.
Early Challenges
Annie: In one respect, I was very lucky, because my my parents are actually very unusual in the sense that they're very democratic. And they have never interfered - I had to take responsibility for my own pool of assets, and I had relative freedom to develop it how I wanted. The challenges really came from not having the - not being able to find people with the right expertise to help me in Asia.
We started with going to the banks, which is typically where you go out in Asia when you say “Well, I want to invest responsibly. So help me find the solutions.” And six, seven years ago, I have to say: Banks didn’t understand. They didn't know what the principles of responsible investing meant, let alone be signatories.
They had some product offerings that they were trying to sell - like, “Oh, we have water fund,” or “We have a solar fund.” But I was looking for a more holistic approach to investing. And it wasn't until I found an advisor based out of Europe that we actually start making progress towards building a sustainable portfolio.
All right, because we take a portfolio approach, we actually invest a lot through funds as opposed to directly into projects. The space where we did the most in terms of direct investments would be in Hong Kong, where we obviously are more familiar with the landscape, we are more familiar with the players. And what we decided to do there was, we wanted to encourage the building of the field or ecosystem for impact investing.
And for investors to be able to impact investing, obviously you need the projects. You need the social enterprises to invest in. And so we did a few things. We invested in some new initiatives that had no track record - for example, Social Ventures Hong Kong. I think we were one of the first batch of investors into their efforts, knowing that it would be high-risk.
So what they brought were a number of social enterprises that they incubated - but at the same time, we weren't simply investing through them into these social enterprises. We were also investing in the team at the SVHK who were trying to promote this idea of social investing, social innovation.
And even though they didn't have a track record, we were hoping that these projects eventually would be self-sustaining and might even return some capital that you can then re-invest - this whole idea of patient capital, but then recycling your dollars. We were hoping that would happen, but there was no guarantee. But we felt that in order - if nobody played, if nobody took the first step, you would not have a pipeline.
So we tried to invest strategically in a few places to start creating that ecosystem and community. Another example on this theme would be - we contributed to the creation of The Good Lab, which created a space for social entrepreneurs to exchange ideas, and to just come together.
And it's hard to say exactly what the impact of that was, but we felt that with some of the players who were supported during those early years so that they could actually grow team, grow talent, and grow projects. I think there is a lot more experiences being created out of them that would enable more people to experience what it means to invest in a social enterprise.
Well, it actually - there are numbers. I'm just not a numbers person, so I tend not to talk about them. But in our report - the impact report that we put out a few months ago - we actually try to be quite transparent about not only our journey, but the projects we invested in, and how we invest in those projects.
I know the report isn't for everyone, because the way that we look at our investments in taking a portfolio-level lens, rather than an individual investment lens, you tend to lose people because they're not all in that situation of looking at their entire capital that way. But we do share, in that report, our financial performance.
Maybe the differences in the way that we set our target - most people would say, “Oh, well we want to maximize our financial return, the highest that we can get.” How we started by looking at what we want to earn on a financial level is: How much do we need to sustain ourselves? How much do we need to generate to sustain our team, our activities, so that we aren't going to run ourselves into the ground?
So we set ourselves a relatively modest target that would be sufficient to cover our expenses, if you will. And our expenses would include our own activities, our team, as well as our grant-making. And we've achieved that objective.
I don't think my job is to tell other people how to do it because I haven't gotten my own learning journey in this. I think the strongest motivation has to come from within, not from what other people tell you you should do. If they don't find that interest, they don't find that passion, they don't find that motivation within themselves, they'll find it very easy to give up - or just stop doing it.
And I think the reason why we've been at it for so long is because we truly believe in it. And not only that, but we feel that if enough people actually engage in thinking about how, through conscious and intentional placement of their capital, they can invest in the future that they create - it's only when more people do it that we have a chance of transforming the system.
I think it has to - the conversation has to start from, if not values, then the question of what it is that you're trying to achieve. What is the problem that bugs you that you want to solve through impact investing? Get to, really, the issue that that motivates them, and then start building up from there.
So if this is the problem, let's look at the problem. What are the - are you trying to just treat the symptoms of the problem, or are you interested in the root cause? And then you start looking at – well, if that's the root cause, what are some of the possible solutions? And how does impact investing play into this, versus the philanthropic route, for example? Or, does it take both?
Whoever is interested in this space really have to ask themselves the hard question, which is “How much do I want to invest myself into learning about this?” We didn't - we started from scratch. But I did a lot of research and educating myself.
Whether it was through just Google searching stuff, “what impact investing was”, reading all sorts of reports that other people generate, the research that they've done, feeling overwhelmed - but still intrigued enough to want to wrap my head around that. Did trips, went to conferences, met people, made visits, so that I can see - really understand different viewpoints and what other people are doing.
So you've got to invest time into the learning, and not expect that, “Oh, I just make an investment, and we'll deal with that problem.” A lot of times, I think in the impact investing space, what has made it less robust than it could be is simply the fact that people are too busy to invest a lot of time.
Fear and Inspiration
Annie: I’m actually very much motivated by fear! Yeah, so of course there are the inspirational elements, but I think I'm first motivated by “fear”, in terms of really not knowing where climate change will lead us. I think we as a human race, as clever and intelligent as we think we are, we haven't really evolved to be able to really do - make very smart choices. And so I'm fairly pessimistic about where the world is headed.
I worry a lot about the future that my kids will face, and the problems that they will face. But that said, I think one has to have hope. We wouldn't be doing this if we didn't at least have some hope that, well, we can still change things for the better. So I think that's where the inspiration comes in. But no, first and foremost, I think I’m motivated by fear, unfortunately!
We are trying - we haven't perfected anything yet, but we are trying to invest – see, the phrase that I use was “We're trying to invest in the future we want to see, or create.” Because every one of us can only do so much, right?
We see the problems with capitalism in the way that it has been operating for the last 50 years. We know that it's a very powerful system, but it's broken in places. And what we're trying to get people to see is that capital markets are still the most powerful force around if you are looking for big-scale transformation.
So the challenge, then, is how to shift the capitalistic system so that it actually works towards making progress and making the world a better place, rather than contributing to problems. So, I mean, that really to me is the beginning and the end of our quest.
Finding the Transformative
Annie: I think we do look for the transformative factor in what that proposal is. We are less interested in enterprises that produce some useful results, but are limited in terms of scale. If it's simply about – it's something that other people have tried, it's just about doing it “better”, executing it “better” - we're less interested.
We're interested in bigger ideas, but done strategically and in a way that eventually could bring very significant changes - either in behavior or in the markets. So those are few and far in between.
And that's also part of the reason why we don't do a lot of direct investment, because you could - it calls for a lot of resources, from the due diligence to the monitoring, and there are a lot of things really with not within your control, and you have very concentrated risk. So we prefer to diversify through investing funds. But we are interested if the right opportunities come along. But like I said - for some reason in Hong Kong, we find very few ideas that are truly transformative.
Well, I think we need everything to change, right? Entrepreneurs may eventually become the multinationals. It might take time, but even the multinationals now started somewhere, right? So we don't say, “Oh, it's only the really determined, passionate, creative social entrepreneurs that can make change.”
No, I think we need all kinds of change, we need change to happen at a much quicker pace if we're going to make enough progress. So we need the multinationals to play a la “shared value”. If they really transform themselves into businesses that put squarely the question of “value” - and not shareholder value, but value to society first - well, we need those, too. And small/medium businesses - they actually form the majority of our communities, so we need them to play as well. So we need everyone to pitch in.
Everyone is a Change Agent
Annie: I think different impact investors - that's just one hat that they wear. They could be a business owner. They could be an employee somewhere, but they have some money to invest, and they want to invest it for impact. They could be large corporates wanting to start a new business line.
So it doesn't - so “impact investor” doesn't describe just one type of animal. They can come from everywhere, they can come from any different type of background. So I think it's really the mindset, is that if you truly believe that you can invest to generate values – and by “values”, I mean not only financial value, but social value and environmental value.
If you believe in that fact, then there's no reason why you wouldn't question, say, if you're a business owner, then “How do I create value – social, environmental, and financial value – through my own business?” Or if I'm an employee, I would ask, “So how is the company that I work in generate all those values? And if it's not, and if they only think about the financial value, am I in a position to also be a change agent? To start asking questions, like ‘Where is the environmental value that we're creating? Where is the social value that we're creating as a business?’”
So I find it interesting that people try to pigeonhole impact investing as just this one thing and kind of miss that, if you buy into impact investing, then you’re, by definition, buying into the fact that investing generates not simply financial returns - but that it could have possible positive social and environmental value generation. And if that's the case, then why shouldn't that apply across the board to all kinds of businesses?
I think, probably, younger people get it more easily - especially if they have not been already brainwashed into thinking that, while you really can't jive financial value generation with the social and environmental value generation, there's still some of those around. But by and large, I think a younger people either get it or want it to be true.
But not a lot of them are in positions of authority or power in order to do enough impact investing to make significant change. This is an overgeneralization. I think in different places, the transitions - or the succession - is happening at a different pace.
And I'm not - and I don't think that age or what generation you come from defines you in the sense that you really can't see outside of your own experience. I think everybody has the potential to look beyond that. It's a question of: Do they have the motivation? Do they have the time? Do they have the interest in looking beyond that?
If you want change to happen quickly, then obviously, those who are in positions of power are the people that you want to influence and change. But by definition, they are also the most difficult group to change, because they are in those positions because they benefited from the way the current systems work. So why would they want to dismantle that? It takes some courage, and take some, I think, insight to want to do that. So I don't have a good answer!
Some Parting Advice
Annie: I think, first of all is: Be honest with yourself as to how committed you are to get on this path. Because if you want to follow through, it will take a lot of effort, and it will take a lot of time on your own part - and resources, if you want to do it properly.
The second thing would be: Find others. There’s no need to do it by yourself and reinvent the wheel. Read our report - we do share our entire journey there, so maybe there's some bits of information there that could help make that transition easier for you. And find not only examples, but people who can actually go on the journey with you. It makes it a lot more fun.
And I guess the third thing is: Develop a sense of urgency. I think, by far, the biggest difference between people who've gone down this path much faster and further are the people who feel that there's an urgency to do so. If you think that, “Oh, this is a nice thing to do, but we have plenty of time,” that's your choice. But I don't think the world can wait.
For more interviews from the "Entrepreneurs for Good" series, check out the playlist here.
Stay tuned for more clips and full interviews in the coming weeks.
The Future of Plant-Based Proteins | David Yeung, Green Commons
In this episode of Entrepreneur for Good, I speak with David Yeung, founder of Green Commons, about his impossible mission to encourage people to leave the meat-based lifestyle for the betterment their health and the planet.
This mission was born through David's personal experience and difficulties as a vegetarian who regularly traveled the world and lived abroad. When he returned to Hong Kong, he found some like-minded others interested in creating a change, called “Green Common”. Over time, David has scaled that group into a number of organizations with the same mission, including "Green Monday", an initiative centered around the idea of helping people replace animal-based protein with plant-based protein.
Being very pragmatic about achieving his mission, David has had a very simple goal at the outset, which is to get people to give up one meat-based meal a week, one day a week, and take steps from there as they’re comfortable.
"We’re entering uncharted waters, so by definition, it’s a learning and trial-and-error process. So think big, dream big, but be ready to fail – and simply learn from it very quickly, and move on. And I think that applies to any entrepreneur in any field."
– David Yeung, Green Monday & Green Common
About The Entrepreneurs For Good Series
Through this series, we speak with Asia based entrepreneurs whose mission it is to bring solutions to the environmental, social, and economic challenges that are faced within the region to learn more about their vision, the opportunities they see, and challenges that they have had to overcome. It is a series that we hope will not only engage and inspire you, but catalyze you and your organziations into action. To identify a challenge that is tangible, and build a business model (profit or non) that brings a solution to the market.
About David Yeung
David Yeung is a noted environmental advocate and founder of Green Monday, an innovative social venture that takes on on climate change, food insecurity, health issues and animal welfare with a diverse platform that shifts individuals, communities, and corporations towards sustainable, healthy, and mindful living.
Under Green Monday, David launched Green Common – the world’s first plant-based green living destination – to introduce a revolutionary food and lifestyle experience. The movement of Green Monday has now spread to over 10 countries, with 1.6 million people practicing Green Monday at its Hong Kong origin.
Follow David and Green Commons:
Website: http://www.greencommon.com
Facebook: https://www.facebook.com/davidyeung.hk
LinkedIn: https://www.linkedin.com/in/david-yeung-77094b1/
Instagram: http://instagram.com/green_common
About Rich
Driven by the belief that change begins with a single step, Richard Brubaker has spent the last 15 years in Asia working to engage, inspire, and equip those around him to take their first step. Acting as a catalyst to driving sustainability, Brubaker works with government, corporate, academic and non-profit stakeholders to bring together knowledge, teams, and tools that develop and execute their business case for sustainability.
Follow Rich
Website: http://www.richbrubaker.com
Facebook: https://www.facebook.com/rich.brubaker
LinkedIn: https://www.linkedin.com/in/richbrubaker
Snapchat: http://snapchat.com/add/richbrubaker
Instagram: https://instagram.com/richbrubaker
Twitter: http://www.twitter.com/richbrubaker
Contact Rich
[email protected]
Full Interview Transcript
David: So I'm David Yeung, and I’m one of the co-founders of Green Monday. And we're trying to change the way people eat around the world towards a more sustainable and healthier diet.
THE PROBLEM
David: Well, there are a lot of things that are wrong with today's food system, in many ways. One of the key things is people eating way too much meats. Livestock industry, a lot of people do not know, is one of the biggest culprits for carbon footprints, and it's also a very inefficient way to produce food. It takes a lot more land and a lot more water resources to produce the same amount of food if you're eating meat versus if you're eating plant-based food.
And also, from a health standpoint, with the animal factory farming practice these days, so many chemicals and artificial things are added to food that this is not the healthy way to eat.
GREEN MONDAY
David: So what we're trying to tell everyone – and what we're trying to empower and enable everyone to do – is shift towards a plant-based diet and a plant-based lifestyle.
Now, we don't necessarily ask people to “convert” to become a vegan or a vegetarian, but rather a holistic shift. So if someone used to be a big-time carnivore, we say, “Hey, can you go green one day a week, or can you cut down on the portion of meats that you eat on a regular basis?”
Which is why we came up with the name “Green Monday”. The idea is – well, Monday is symbolic to a new start, and at the beginning of each week, let's start a new habit. And of course, from Monday, we hope it will grow into every day – and from food, it will grow into the whole entire lifestyle, to become healthier and more sustainable.
When people talk – when we talk about the term “sustainability”, or when we mention “climate change”, “global warming”, people think of these as mega issues that only major corporations or governments can deal with. So each one of us is quite powerless. So because our impact is so small, people would think that, “I may as well not do anything, because at the end, what does my little change mean to the world?”
However, the way we look at it is, if we can engage everyone to take a baby step and synchronize that baby step to be taken together, then it becomes a giant impact and a giant leap.
So the key is: How do we lower the barrier and make it engaging, make it approachable, make it super easy for anyone to do? But at the same time, they know that if they do it on an ongoing, sustainable, long-term basis, and if they start to spread this among their friends and family, this will create a mega impact as well.
And at the end, governments and corporations – no matter how big they are – they still need the change from individuals.
Well, on one hand, it is a very tough sell because food is such an integral part of everyone's daily habits. And of course, people want to choose what they love to eat. But on the other hand, food is also a great entry point. Because if you can find a way – if we can find a way – to make plant-based green diet delicious, tasty, affordable – and hip, trendy, popular – then it also becomes something that is super easy for a lot of people to jump onto the bandwagon.
So we look at it as a difficulty or obstacle, but at the same time, is also an opportunity. It's also the quickest way to engage people, because you will never forget to eat.
Now, with the rebranding of Green Monday, rather than calling ourselves – “Hey, try to join our ‘meatless movement’,” or “Try to join our ‘vegan movement’,” we simply use the word “green”, which is a positive, engaging, encouraging platform.
And we say, “Even if you do a tiny change, you are still making a step towards a greener world.” So we turn a negative into a positive. We turn what people perceive as a sacrifice into something that they can add value and contribute to the world.
OPPORTUNITIES FOR ENTREPRENEURS
David: Well, this is a – I think people are losing their trust in big companies. And that is not necessarily just big food companies, but big companies in general. The last seven or eight years, too many things have been exposed – how big companies have exploited the system, whether it’s from the food industry standpoint, in the finance industry, you name it. So a lot of those behind-the-scene things have been exposed, and people are losing that faith or trust in these brands.
And also from a second – I think another reason is, these mega companies, they do not know the “pulse” of the new – whether they're Millennials, or the New Age customers. They simply don't know exactly – what are they eating, and what is the trend going to be.
So that gives a huge opportunity to a lot of food entrepreneurs – or nutrition, innovation, etc. – a lot of opportunities. And consumers at the end will vote by the consumption and say, “Hey? You know what? This segment,” such as almond milk, or coconut water, or aloe drink, or whatever that is , “is the feel that I want.”
So a lot of times, the big companies – first of all, by default, because they're big, they also move slower. But second is, they simply don't get the pulse. And again, finally, is people losing trust in them.
Well, it used to be – when we think of “vegan” or plant-based food, it used to belong to the niche. Just the ultra-healthy people, the yoga people, fitness – just that niche group.
But now, people are all very aware that hey, the protein that you're getting from meat – whether it’s through our education and advocacy, or simply from many news that they read – they know that this way of acquiring protein is not the healthy way.
So with plant-based, I mean, there are a lot of companies such as Beyond Meat, such as Impossible Foods. And there are many, many examples that are coming up and using pea protein or other types of plant-based – a lot from nuts, for example – and to come up with these new products. These could be plant-based chicken, plant-based seafood, plant-based burger.
And they taste very much the same as what people are used to tasting from the regular food, but is healthier, and is also nowadays affordable. So this no longer just belongs to that healthy, ultra-healthy sheep niche of people, but rather, this is getting into mainstream.
Now one very, very good example, I think, is the dairy industry – dairy versus non-dairy. There are a lot of data that is showing that the dairy industry is losing market shares significantly, simply even over the last three years.
I just read the news couple days ago that skim milk, the sales of skim milk in the entire United States dropped 13% in one year. We're talking about an entire segment, a sector of product dropped 13%.
That's actually a debacle, basically. It's not a single product or single brand – it’s a whole category of things, because people realize that, “Hey, if I'm gonna drink skim milk, I may as well drink almond milk.” That is lower calorie, and healthier, and also better for – well, there's no animal involved, so no cholesterol.
So what we see is there a lot of alternatives that are now becoming mainstream. So it's not just that tiny, cute niche that it used to be.
Well, what is very exciting is, from an innovation standpoint – and even from an investment or venture capital standpoint – there are so many opportunities that are coming up from everywhere around the world. The food business, or food industry itself, is a mega-business. A lot of these blue chip companies that have been around for 30, 40, 50 years – or even 100 years – these are mega, multi-billion dollar market cap companies.
But now people are starting to shift and say, “Hey, I'm aware that that is GMO food,” or “I'm aware that this food has way too much antibiotics or way too much pesticides in it.” And they want to shift towards – whether it's organic, or natural, or plant-based, or non-GMO – and that is a mega trend that is happening around the world.
And food safety is such a major issue nowadays, because everywhere – particularly in many countries in Asia – food scandal is almost becoming a regular thing that they see or they read on the news. So I think from a business or entrepreneurship standpoint, this is just an amazing time.
Well, I think 2015 or ‘16 is definitely the tipping point. We've been kind of growing and getting up to that point when the mainstream starts to realize the natural food market, they start to come in, they start to try and then ultimately just adopt it for good.
And I think in the US, the last seven or eight years, that momentum has been building. But around 2015 or ’16, that's when we just see that natural food – or healthy food – is becoming the food industry.
When we go to the food – the Expo West, which is the biggest food trade show, based in LA – I mean, not only do all the vendors fill up the halls, but the number of visitors and people who come to visit that is just unbelievable. And it is exceeding any expectations in terms of the organizer of how many people are coming to these trade shows.
And then organic food, right now in the US – Whole Foods is not the biggest retailer of organic food. It’s actually Costco. So from a pricing standpoint, is also coming down to the point that it's becoming mainstream, and affordable, as well.
I was in San Diego not too long ago, and I was looking at organic kale for US$1.69, and I'm like, “Wow! I mean, 10 years ago this would be like $4.99. But now, it's US$ 1.69.” And actually, it even looked better than the version from 10 years ago.
Rich: But what about in Asia? I mean, okay, San Diego, the US – like, what about in Asia? What's happening here?
David: Well, Asia is a little bit behind the curve, but it's catching up very fast. When we started Green Monday and Green Common in Hong Kong, at the beginning, people were like, “Hey, people in Asia are not going to follow this. I mean, this is a ‘Western thing’.”
But of course, before you know it, everyone is saying that, “Hey, I want to go Green Monday. I want to try a ‘flexitarian’ lifestyle”, meaning moving more towards plant-based – not necessarily full-time, but shifting the ratio.
Right now in Hong Kong, about 23% people are adopting a flexitarian diet, meaning through cutting down on the portion of meat, or choosing a day, or two, or three to go vegetarian. They're doing it. That's one out of five – one out of four, actually, nearly 1.6 million people.
So that's – you're talking about a lot of people, are ready to jump in. They just need a platform, and you just need to provide the tools to enable and empower them.
TRANSPARENCY AND COMMUNICATIONS
David: Well, I think number one is: At the end, we still need all the basic skills that an entrepreneur would need, so marketing is always important. Research, in terms of nutrition, in terms of all the environmental impact – I think those are all important. Because the more transparent you are, the more people know that your food is clean, the more they will lean towards choosing your product. So from a nutrition/R&D standpoint, and then from a marketing standpoint.
Now, we still need all the techniques of traditional marketing, but now these people want transparency more than ever. So the more honest, the more frank you are, the more people would welcome or embrace your product.
And then, at the end, we are still talking about distribution. I think that is something that food, or food tech, is very different from other technology. You cannot just download it into your cell phone and eat from your from your mobile device, right? So distribution is still a piece that, from a food entrepreneurs’ standpoint, you cannot overlook – because at the end, people need to find the food at a restaurant, or at a supermarket, a local grocery.
So it is kind of like mixing between innovation, but at the same time, the traditional way of doing business.
SOLVING A PERSONAL NEED
David: I have been a vegetarian for 15 years, and I started vegetarian when I was living in New York. I then moved back to Hong Kong about 12 years ago, and it was very difficult for me to find plant-based food – whether it is going out or dining in. Both was a ultra-difficult.
And at the same time, I always needed to explain to people, one meal at a time. People would ask me, “Oh, so what happened to you? Why are you vegetarian? Where do you get your protein? Are you sure you'll be healthy?”
They showed genuine concern about me, and then I showed genuine reverse concern about them. I say, “Actually, you know what? Do you realize what you're eating is full of GMO or antibiotics? You're eating secondhand antibiotics if you're consuming meats nowadays.” So people are like, “Really?”
I mean, so that has gone on for a long time. And finally, the opportunity came along when a good friend of mine – he's also an entrepreneur, a social entrepreneur – and he happens to be a vegetarian as well. He is a big marathon runner, and the less meat he consumes, the faster he runs.
So finally – we’d always brainstormed a lot of ideas, and finally it came to the topic of food, and then my eyes light up. I was like, “Hey, you know what? I really wanted to do something about this for a long time – both from a selfish reason, because I want to have more choice – but at the same time, I want everyone to join in.” So that was how Green Monday was started.
Besides transparency, I think authenticity is something that's very important. They do want to associate it with a face or someone. That someone doesn't necessarily need to be a mega-celebrity or a superstar, but rather someone that they feel like it's just one of them. And they can see from that person, “Well it's okay to change, and actually, this is a better way to live.”
So we have a couple –myself included – a couple people who are on the core team. So on a day-to-day basis, we are either talking to business or talking to the general public market and telling them that, “Hey, this is a lifestyle that everyone can adopt.”
So authenticity is one – and the other one, I think, is simplicity. People, when you say “vegan”, “non-GMO”, “dairy-free”, and then “raw”, “organic” – there's all these criteria that are from people. And they just say, “Hey, at the end, I mean, I'm not a PhD in food. I just want to eat healthier, but I still want tasty food.”
So there are people who are getting very sophisticated and educated about what they're eating, they would study the entire label. But if you talk to the general – the entire market of just mainstream people – they want something simple.
So that's how we came up with names such as “Green Monday” – or our shop, which is called “Green Common”. It is meant to be so simple and easy – that hey, if you come in, we have done that selection on your behalf. You can trust this choice. We want to make it easy for you. You do not necessarily need to be a PhD in nutrition in order to eat healthy. And of course, the food that I selected are tasty. They're not the type that’s super healthy, but also completely unappealing in taste, right?
So I think these are all kind of the mix that makes our engine work. So for any food entrepreneurs, I also suggest that it should be fun, it should be engaging, and authenticity and transparency. The more they can associate with a person, rather than just a big logo, and a lot of marketing dollars, and billboard advertising – those actually are starting to lose that appeal.
THE SOCIAL MEDIA MEGAPHONE
David: Well, I think usually with transparency, with authenticity, it means taking a long time to build that momentum. But thanks to the age of social media, we have a mega broadcast platform that 10 years ago, we did not have.
If you have to wait for word-of-mouth, wow! How much long does it take to get to seven million or 70 million people? But with social media, it gets viral so quickly. So I think if you have a good cause, if you have a good message, if you have something that people genuinely feel that they can share to their friends or their family, it actually can get viral super easily.
So we have only been around for four years, and we're in 16 countries right now. Even I am amazed and stunned, in a way, by that progress. On a daily or weekly basis, we hear stories from people in Indonesia, in Holland, in the UK, in Mexico who are adopting Green Monday. And I'm like, “Hey, where did we get these people from?” And of course, it's through the Internet and social media.
So I think that kind of compensates for the traditional deficiency, or the disadvantage, of doing it that human, authentic, personal way. Because it used to take a long time, but now social media really helps completely accelerate that.
Now, for example, with our food emporium – our grocery market and restaurant food service – the way I look at our measurement of success, it's not just from a business standpoint. Of course, we need to be profitable, but beyond the margin – beyond the top line, bottom line – the other side of our business is wholesale.
The more people know about these products, the more existing restaurants and existing supermarkets will say, “Hey, I want that product, too. I want that product on my shelf.” So we are also distributing these brands and products into other supermarkets, and also other restaurants. Now, that makes it a lot more scalable, and also scale way faster – because at the end, building a store takes a long time. And of course, it's also capital- and human labor-intensive.
So once you start to spread that out, and then you see that restaurant is using our product, that restaurant is using our product, and that supermarket is selling our brand, too – then it becomes a citywide, or soon maybe, a region-wide thing. That these products are simply everywhere, and they're included naturally into the general food spectrum.
So, when I see that, “Hey, people are just picking up that product on the shelf,” or when someone just tells me out of the blue that, “Hey, I've been practicing Green Monday, or Green four days a week for the last six months,” those are all our measurement of success. And the more that happens, the more we know that the whole paradigm and ecosystem is really changing.
Well, at the end, scalability is always the biggest challenge. We cannot scale fast enough. I mean, we want to impact 100 million people – or even one billion, two billion, seven billion people. I think that is absolutely the ultimate goal.
How do we get there fast? How can we reach 100, 200, and then one billion? How do we get there? We're still trying to solve that puzzle, but I think we are on the right direction, and that from the team standpoint is super encouraging.
3 TIPS FOR ASPIRING FOOD ENTREPRENEURS
David: Well, first of all, food entrepreneur or any entrepreneur – I still believe that accumulating business know-how and general business experience is still key. A lot of times, people are super excited – too excited about becoming an entrepreneur, entrepreneurship in general.
And I would actually say that: Hey, do work in a big company – even for a couple years, because that is still a good way for them to see how companies work and what is missing from the big corporations. Because by knowing what they are not doing well, then you know what you can do well.
So first of all, the David Yeung four years ago already has been in business for 14 years, I think. So it wasn't like I was a completely rookie entrepreneur, but rather, I've been doing other business and accumulating business know-how. So that's one.
Number two, I still think is: Think big and dream big – and also be ready to fail. You're not going to get it right the first time, and chances are, there are a lot of things that…
We’re entering uncharted waters, so by definition, it’s a learning and trial-and-error process. So think big, dream big, but be ready to fail – and simply learn from it very quickly, and move on. And I think that applies to any entrepreneur in any field.
If authenticity is so important, then the third one has to be: You’ve got to do something that you absolutely believe in, and that you love. It has to be a part of you – genuine you, and what you believe in.
Rich: That’s awesome.
For more interviews from the "Entrepreneurs for Good" series, check out the playlist here.
Stay tuned for more clips and full interviews in the coming weeks.