The following is a conversation between, founder of Living Goods, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer in New York City.
Denver: When people want to find an organization that has taken the best practices from business and successfully applied them to the nonprofit sector, Living Goods should be the place to start. And in this case, the business model they have created is getting urgently needed healthcare and medical supplies to people in the developing world, who otherwise would lack access to them. It’s a wonderful story, and here to share it with us is Chuck Slaughter, the founder of Living Goods. Good evening, Chuck, and welcome to The Business of Giving.
Chuck: Thank you for having me. Delighted to be here.
…it’s really become more like the Uber of healthcare, putting the power really in the hands of the consumers and enabling them to call for the healthcare they need any time of day.
Denver: Give us a snapshot of what Living Goods does and the mission of the organization.
Chuck: Our mission is really simple. Our mission is to save kids’ lives, but we take an unusual approach to it. What Living Goods does, we support networks of community health workers throughout Africa. These are women who are digitally empowered. We give them a smart phone, and they go door to door. They help teach their friends, neighbors, and family how to improve their health, and then they make a living by selling high-impact, low-cost health products.
What’s really transformed this model in the last several years is technology. When we started, we described what we do as the Avon of community health, bringing the power of a simple business model to the imperative to improve healthcare in the developing world. In the last three to four years, it’s really become more like the Uber of healthcare, putting the power really in the hands of the consumers and enabling them to call for the healthcare they need any time of day… and have a local, independent healthcare provider come to them, provide them an accurate diagnosis using an algorithm on their phone, and sell them the medicine they need right there on the spot.
Denver: Unbelievably interesting. You came from the private sector. You built a company from scratch. It became a $100 million company called Travelsmith, and you sold that around 2004. How did you get from there to coming up with this idea of what would ultimately become Living Goods?
Chuck: There actually was an Ah Ha! moment. I’ll share a funny part. It starts accidentally, as many big changes in life do, with a beer. I was having a beer at a party in San Francisco with a friend of mine, who had also recently sold a business. He had been supporting a little healthcare endeavor in East Africa. I think at some point, I must have made the mistake of telling him what I was thinking about– the next thing I wanted to do. I had worked in the social sector when I was younger, just out of college. Since then, I’ve always been captivated by the idea… been animated by the idea of: How can we use the tools of business to help solve big, complicated, important social problems?
My friend, Dan – who has by the way the best email address that I know of; his name is Dan German, and his email address is email@example.com. Shout out to Dan because Dan really changed my life. He got me involved in the healthcare program in East Africa. That program was using the franchise business model to support an expansion of access to basic medicines in Kenya. My wife and I gave them some money. Dan asked me to join the board, which I did; and I went over to see this, and I was really just immediately entranced by this idea.
Yet, one of the things I saw was that many of these stores, these franchise medical clinics, were not doing so well. They were losing money. What we also noticed was that they had a lot of slack time during the day. There were periods when a lot of people came in, and a lot of periods when it was very quiet. The local manager and I came up with the idea of getting people out of their little stores, where they were twiddling their thumbs, and out to the community and going door to door, and going to schools and churches and such.
This worked fabulously. It turned many of the stores from losing money to making money. It made them more proactive and more… what we like to think of as the healthcare business rather than just the “sick care” business. I found myself ruminating on this, and I thought: Going out door to door is so much more successful than waiting for people to come to you! What if you took that to its logical extreme and got rid of the storefront and just went to door to door? Hold the phone. I’m not the first person to think of this crazy idea. You think of companies like Avon which started here in the 19th century–Tupperware, Amway and so forth.
I went and did my homework, and as part of that homework, I actually went and became an Avon lady. I don’t think I broke any sales records, but I did learn a lot of things. And there are lessons that I took directly from that experience that ended up in forming the original concept for Living Goods.
Denver: That’s a great metaphor because I think that really brings it home. I understand exactly what you’re doing.
You mentioned access to healthcare. There are about 7.5 billion people in the world right now. How many of them don’t have access to basic healthcare?
Chuck: There seems to be a two-part answer to that question. Well over 2 billion people lack access to adequate healthcare. Upstream from that problem, depending on who’s counting, we have a shortage of anywhere from 2 to 7 million healthcare workers in order to fill that need. It’s going to continue to grow. How does this manifest itself? Throughout the world, there are still, despite all the advances, we have 6 million children who are dying every year for want of the simplest healthcare that costs less than a cup of coffee.
Denver: Let’s talk a little bit about these healthcare workers… or these community health promoters, as you call them. I know most of them are women. Tell us a little bit about them.
What kind of people are you looking for? How do you hire them? How do you train them?
Chuck: Taking the cue from the direct-selling model, what the whole community health worker idea and the Amway-Avon idea have in common is that: Who do you trust most? Your friends, your neighbors, the people who are most closely connected to you socially. That’s the power of the Avon model. It’s the original social network business.
It probably became profitable a lot earlier than a lot of them that we think of today. Women who we recruit are high-school educated, usually no more than a high school or even grade school education and live in the communities that they serve, and it is 98% women. They tend to be in their 20s, 30s, and 40s. These are women who we give the opportunity and who seek the opportunity both to make a difference and to make a living at the same time. That’s what this enables them to do. They’re recruited very carefully through a process of referrals, applications, role playing, math tests, numeracy tests, and so forth.
Denver: You only hire about 20% of the applicants; so it’s a pretty rigorous process.
Chuck: In some places… even fewer. Some places will have 20 or 30 applicants for two or three slots.
Denver: Each of them is then given a Living Goods health tool kit in a bag. What’s in that bag? And what do they focus on when they go and visit a potential customer?
Chuck: You can think about the bag as two different sets of tools. One is: What sort of products and services can they provide? In the places we work, 60% or 70% of preventable deaths come from simple things like malaria, diarrhea, pneumonia, complications in post birth. So, the areas we focus on from the health point of view are those three big killer diseases…. Pregnancy, family planning, nutrition, immunization… those areas.
And what are the products they have to address those? They have the medicines for malaria, for pneumonia, for diarrhea. They have a blood test they can do for malaria. They have family planning products. They have basic household hygiene products like soap and so forth. Plus, they can also provide what we call home health tools like water filters, high-efficiency cook stoves that reduce the amount of smoke in the house, solar lights. Importantly and increasingly, we’re really in this nutrition space because nutrition is so important in childhood development; so they sell a line of fortified foods that help kids grow healthy and strong and do better in school.
Denver: Like porridge.
Chuck: We have Living Goods Healthy Start porridge.
Denver: Speak a little bit more about this Smart Health App because it’s so interesting. What are the capabilities of that app?
Chuck: You asked about the tools in their toolkit; this has become the most important tool. Every Living Goods health worker– these are not just Living Goods health workers. Every health worker we support is actually a government-authorized health worker. So, we’re really working to strengthen and support the government community health strategy.
Denver: Tell me if I’m right about this. They don’t work for you. They’re entrepreneurs. Correct?
Chuck: That’s right. They’re independent entrepreneurs. They’re not on our payroll. Not on the government’s payroll. But they serve the government’s community health strategy. This Smart Health app that we created sits on an Android phone. We provide every health worker with an Android device. It does several very, very powerful things. One is, it has an automated diagnosis algorithm that allows them to accurately and consistently diagnose malaria, diarrhea, pneumonia every time; to accurately, consistently triage pregnancies; have an informed, structured conversation about family planning and such.
This enables us to ensure the quality of diagnosis being done in the village level in these far-flung places. But also importantly, and what really in a way is our secret sauce is, it’s a performance management system. It enables Living Goods field managers, their supervisors, government ministers, and even our funders to see the performance, to see every single transaction between that health worker and her customer in real time.
So, every child who is assessed, every pregnancy visit, every postnatal follow-up, we get the name, the telephone number, a GPS location, and a timestamp; and that One: enables us to audit that everything that we’re saying we’re delivering is actually being delivered. Funders can see that. That, in turn, can be checked very quickly and efficiently. So, instead of having to go out later and double-check these things on foot, that data can be almost immediately verified through a text or a phone call by an independent source.
But the performance management aspect is really a game changer. You can imagine this community health idea is very hard to manage. People are independent. They’re out in the field. They can’t punch a time clock. Supervisors can’t be with them. So, how do you manage their performance? This system enables their managers to see everything they do in real time. Here’s where it gets really cool. We now put a tool in the hands of the managers that allows them to use the data that are coming back from their health workers to see who needs help on any given day.
Denver: Great. That’s robust feedback.
Chuck: But it’s fast, and it allows them to prioritize. Here are health workers– maybe five who are struggling because they’re not registering enough pregnancies. You can see that in real time; get out in the field or call them. It just speeds that whole performance management process. It used to take a cycle time of six to eight weeks for information to get from the field, get collected on paper or tabulated, put in spreadsheets, sent to an office and then sent back. That feedback loop is now instantaneous.
Denver: Has that performance management mindset permeated the entire organization, right to your headquarters in San Francisco? Would that be a way to define your culture?
Chuck: We’ve always had that, and it predates the digital. We’ve always been a performance-centered, performance- focused organization. Every health worker, every manager has had specific weekly targets, and we’ve always tracked those. By the way, the other thing that distinguishes how we work is that everyone in the organization is paid for performance. So, those frontline health workers are paid for performance in two ways. One is, they can earn a margin on the sale of some of those products. Two, increasingly and importantly, we can pay them incentives based on the specific task that they’re delivering on every single day. Health outcomes we need to do have nothing to do with the product, like registering a pregnancy or following up with an acutely ill child, and we can pay them specific bonus for each one of those that they do.
Denver: Let me ask you one more question in this regard, and that has to do with inventory. So many public health systems that I’ve looked at: they’re always running out of stock of essential medicines.
How does Living Goods address that challenge?
Chuck: I have to say, this always befuddles me. I’ll tell you why. I started this company, Travelsmith. Travelsmith has a direct mail catalogue. We mailed, at the peak, probably 4 or 5 million catalogues a month. We held 15,000 stock-keeping units. And the Number One customer satisfaction issue is: Are you in stock? By the way, our lead times were months and months. We managed to have a very high in-stock rate with that level of complexity, 15,000 stock-keeping units. And these community health systems, we’re talking about 25 or 30 items you have to keep in stock, and the lead times… really, these things have very long shelf lives, the lead times are not that long. It shouldn’t be that hard.
In fact, it isn’t, in our view. We maintain our own system of branches and warehouses. We have between us and our partners in the region, we have over 100 of these throughout East Africa. We make sure that those outlets are in stock 100% of the time; and of course, we have a digital system for that as well, so that we can see the inventory also in real time. So, we know days, weeks ahead of time if stocks are running low.
Denver: You believe, Chuck, that evidence of impact for a nonprofit organization is almost akin to what profit is to a business. Share with us a little bit about your thinking on that. And what have you done to create that kind of evidence that shows that these interventions are really working and making a difference?
Chuck: As many of your listeners will know, the gold standard for improving the impact of a social intervention is a randomized control trial. We did something that was a bit controversial, which is we committed to doing one of these randomize studies literally from Day one. I’ll tell you why. Very personal. I do this pro bono, and I wanted to make sure, I wanted to be certain that I wasn’t wasting my own time, and I knew very little about this kind of research when I started. But I quickly learned that this was the best way, not necessarily the cheapest way, to know for sure if you’re having an impact. So, we invested in one of these randomized studies. Great support from one of our big early funders… The Children’s Investment Fund Foundation– been with us for over 10 years. We were hoping that this would show a 10% to 12 % reduction in all-cause child mortality.
We got the results from the study a few years ago. This was done across 214 villages, 8000 households. It was done by some of the best teams in the business from the Poverty Action Lab. They did the data collection, and we worked for Innovation for Poverty Action. The result really floored us, and we exceeded the target by almost twofold. The study showed that we were reducing child mortality by over 25%, and there were subsets of areas where we saw reductions of 30% and 40% in some geographic areas.
Not only that, we saw things like a significant reduction in stunting. One of the most surprising, unplanned effects. They surveyed independent, non-Living Goods providers… again comparing where we worked to some of these control sites… and they saw the people who were “competing” with us, that their prices were as much as 17% lower than in the control sites. Just as importantly, if not more so, the prevalence of counterfeits…which was a big problem in this African markets. Counterfeits can be up to 30% or 40% of what you find in these private, poorly regulated outlets. The prevalence of counterfeits in competing outlets dropped by 50%.
Denver: The unforeseen benefits of this were…astounding!
Chuck: You usually think about the unintended consequences being negative.
Denver: I know that this was not inexpensive. It’s about $750,000, but I can only imagine that that has probably paid itself over many times as you shared this information with the donor community.
Chuck: This was probably the most transformative investment and activity that we’ve engaged in. Obviously, it was very persuasive with funders. Just as importantly, it was very persuasive with local policymakers who are critical to our journey, and very persuasive with partners who we work with and who we seek to work with to replicate this model. That’s a core element of our philosophy and our strategies. We’re not engaging in this work just to build Living Goods. We’re really trying to invent a better way for people to get access to health care, and our measure of success is not how many people we serve directly. It’s how much we’re moving or changing the overall landscape of community health. So, being able to persuade other implementers, policymakers, private funders, and importantly, these institutional funders like USAID and the Global Fund. That kind of research has been indispensable. We’re actually doing a second RCT now
Denver: What I find to be interesting about that too, Chuck, was that you took a pause about a year in on this stuff. Then you tweaked that a little bit, and you also looked at your operations to see where they could be strengthened. That really gets me to this. You’re a learning organization, and you’re a very fast-learning organization, and that is so much easier said and done.
What are some of the keys to learning fast the way you do at Living Goods?
Chuck: Wow, it’s a very powerful piece of how we work and how we think, and we’re fortunate to have funders who get that. It started with thinking about: How do we want to finance this? So, we’re funded in an unusual way. The majority of our funding comes from successful entrepreneurs who have become successful philanthropists; these are people like Chris Hohn of the Children’s Investment Fund Foundation, Jeff Skoll, Richard Branson. Very lucky, but we sought like-minded funders who saw the power of using the tools from the private sector, but who also are willing to provide a core unrestricted funding.
Unrestricted funding allows us to try things and to walk away from things that aren’t working. So, that kind of funding flexibility is a key piece of it. Behind that is a willingness to stop doing things quickly that don’t seem to be working. That’s a problem in all the sectors. It’s a particular problem in the social sector. We try to break down big ideas into small pieces and test those quickly and cheaply. The mantra I always think about is: What are the ideas that we can generate that have the potential for really enormous, large impact.. or large improvement and sustainability, but that we can test quickly? That’s where the big payoff comes.
Denver: Sticking with the idea of funding and also the concept of performance and results, you’re teasing out this proposition which will actually lower donors’ risk when they help support Living Goods. Tell us what you’re thinking about there.
Chuck: If I can step back for a second. I think a big challenge in financing global public health right now is that the total envelope of funding for public health is flat or declining. You take into account inflation, what’s happening in the UK and the US, and some of the other key funders. It’s a challenging environment. Needs are not decreasing, but the financing available is tight. My view is that one of the reasons for that is: let’s face it, there’s a big chunk of taxpayers out there who don’t feel like they’re getting their money’s worth when they’re investing in any kind of government programs– domestic, let alone foreign aid.
We’ve had funders public and private for years, to oversimplify it, a funding model which is pay for inputs up front, pray that you get outcomes out back. We think there’s an opportunity now that there’s increasing interest in to bring in a new financing approach, where you provide an opportunity for funders to pay for results rather than just pay for inputs. If you have the power of an RCT like we do and proven results, that’s not so risky for us, but it’s a significant risk reduction for the funders.
My hope is by– not just Living Good-, but other actors– not just in healthcare, but education– using these pay-for-results sort of schemes will reduce risk for funders. If philanthropic markets work anything like the capital markets… which they do to some extent, reducing risk should attract more capital. Literally, what are we talking about here? It’s a mechanism that would allow any funder, private foundation, individual, USAID, to buy results basically from Living Goods… to buy the number of pregnancies we can deliver in a facility, the number of children that get treated for malaria, the number of women who we convert to modern family planning method… and pay us a bonus or piece rate for each of those things that we deliver.
Again, going back to your question about technology, technology is a powerful enabler of this pay-for-results idea. It’s an idea that’s been around for a while, but it struggled, and partly because the cost of verifying results is prohibitive if you have to do it on foot. With the technology I’ve described before where we capture the name, phone number, GPS of every contact, those results can now be verified with a text or phone call. Reducing the cost of verification enables this pay-for-performance kind of financing.
Denver: That is a game changer, and you’re absolutely right. I think with social impact bonds and other things, sometimes the intermediaries… and Did it work? Did it not? It’s a little bit hazy, but when you get it like this, it’s pretty clear-cut. You don’t need anybody to… you don’t have to go to instant replay to decide whether the ball was caught or not. It’s right there for everybody to see.
I want to talk a little bit about collaboration, Chuck. Before we get to some of the NGOs.
Chuck: I should add another thing about that. We’re very lucky that we have a visionary funder here in New York, Deerfield Foundation, who are serving as the pilot outcome payer for this pay-for-results mechanism that we’re creating. So, our goal right now is to figure out how to syndicate this to others. We wanted to syndicate a whole range of different kinds of funders, private and public, but Deerfield is paying for the design and construction of this thing that other funders will be able to leverage.
Denver: We will stay tuned on that. It’s very exciting.
As for collaboration, let us start with a place that a lot of people don’t start, and that’s government. We sometimes overlook government, and I know the success of these ventures are so dependent upon having a government creating the ecosystem that allows organizations such as yours to be successful. Tell us a little bit about your partnerships that you had with governments over in Africa.
Chuck: I’ll start by saying to those of you who may know anything about Living Goods… when I started this, I really thought of government as the problem, not the solution, which I think is true to some extent. But let’s face it. Ten years, 20 years, 50 years from now, if philanthropists in New York are still paying for healthcare for our customers in Kenya and Uganda and Zambia, we will not have succeeded. That can’t be the end game here. The endgame has to be a vibrant, locally owned, locally financed community health system. If you have that endgame in mind, the question you have to obsess about is: What has to be done between where you are today to get there?
Start with this. Every health worker we support is by definition a government health worker; increasingly the way we see our job is helping the government strengthen its system for selecting, training, and as we discussed earlier, doing the performance management for these health care workers. The mobile technology you described is a key enabler for that. It enables us; the technology has a lot of the business intelligence, if you will, built in to the app. So, it’s a way of transferring that knowledge, transferring the model, if you will, more seamlessly to government as the owner.
But the other big question there is: How eventually do you get governments to finance this? Again, this is a place where I think this pay-for-results approach can potentially be transformative. Governments can go to their own traditional funders– like bilateral agencies– and say, “Look, you’ve been reluctant to invest with us to do community health before. What if we can give you a pay-for-results mechanism so that you’re only paying for what you get?” It’s another way we are seeing that we can lay the groundwork, the path, that enables governments to become the ultimate both managers and funders of this endeavor.
In so many other sectors, you think about technologies potentially destroying jobs. This is a case where it’s actually creating jobs.
Denver: It’s so significant on so many different levels. I was stunned to see that, it’s like 1% of our government programs in this country have any evidence behind them. It is stunningly low, and it’s something that we urgently need. The other thing about social entrepreneurs I would say, I’ve had so many people on the show who said that when they started out, they wanted nothing to do with government. Then they realized that if you’re ever going to have impact and scale, you have to include them. You just can’t do it. They have too much of the leverage of power whether they give money or not; they’re too critical to the process.
Chuck: I’ll show you another really interesting aspect of working with government in this day and age in sectors like healthcare and education. The other power of this technology, when you think about it, is that it’s enabling these low-skilled, high-school educated women to do relatively sophisticated healthcare work. With the aid of this kind of technology, we now have gotten permission and authority from these governments to enable these high-school educated women to diagnose and treat pneumonia.
In any other markets, you’d need a minimum of four years of post-graduate education to do that to be able to provide those kind of services. The technology provides a way to train people much faster and to ensure the consistency and accuracy of the way they’re doing these important medical procedures. It’s a potential, a real game changer. In so many other sectors, you think about technologies potentially destroying jobs. This is a case where it’s actually creating jobs.
Denver: That is so good to hear because it does exactly. We fret about how they’re taking them away, and here it is. It’s disruptive in such a positive sense.
Getting to the NGOs, you had some great collaborations with the likes of BRAC, Population Services International, CARE, just to name a few. But boy! You announced a big one at the World Economic Forum in Davos just recently with Last Mile Health. Tell us about that.
Chuck: The context is: we’re an organization that believes passionately, and from the get go, about the power and importance of partnerships. If you have the ambition really to transform the healthcare system, that’s something that no one organization can ever conceive of doing on their own. I want to give a big shout out to our partners at BRAC. BRAC was our first and biggest partner. We’ve learned a tremendous amount; for your listeners who don’t know them, you did a great show last week with BRAC USA as lead.
They’re one of the greatest NGOs in the world that nobody knows about. Terrific at scale and delivery. Started in Bangladesh in the 70s. They are now the largest NGO in Uganda, which is one of our biggest countries, and we’ve had the pleasure of working with them and learning from them over the years. But if we can’t figure out ways to help other organizations to learn from what we do, and in turn for us to learn from them, we won’t get to the end stage.
As part of that journey, this last year, we entered into a terrific partnership with Last Mile Health. This is a beautiful very complementary arrangement. First of all, Raj and I have tremendous respect for each other. Raj Punjabi is the founder of Last Mile. I’m the founder of Living Goods. I’m a business guy, an MBA. Raj is an MD, practicing physician at Harvard. If we’re going to solve the healthcare problem, it’s going to be from a combination of those skill sets.
Last Mile, Raj is originally from Liberia. He built this organization to help fix the healthcare system there. They have a West Africa base. We’re in East Africa. It’s very very complementary. We came together, but in part… this is a great story for the philanthropists in your audience; we were in part brought together because we had a lot of common funders who saw the power of this potential collaboration. Over the course of the last year, six of these major funders came to us together and committed $50 million to help us respectively scale up across the continent of Africa.
This idea of a digitally empowered community health worker, and technically, the big piece we’re bringing to the partnership from our side is this Smart Health app, and Last Mile is creating a new platform called the Community Health Academy which is going to put online a whole set of resources for community health policy makers and practitioners to help in the dissemination of this approach. I have to add just on a personal note, I have tremendous personal respect for Raj who I’ve known for years. As I mentioned, I also wear the philanthropist hat. I’m a trustee of the Horace Goldsmith Foundation here in New York. In that role, I’ve advocated for and secured funding for Last Mile going back five or six years.
Denver: Just a great partnership. Now, what do you hope to accomplish? I know this $50 million is a challenge grant; we’ll get to that in a second; but what are the goals and objectives as you look to see what you’re going to try to achieve in the next four years or so?
Chuck: Our ambitions are big because the problem is big. Three years ago, Living Goods was serving a million people, which was a lot. With the results from that RCT I described, we scaled up from a million fivefold to be serving over 5 million people; also an impressive number, bigger than a lot of small countries you and I can name. But we don’t want to stop there. With this envelope of funding, it’s providing the foundation to help us along in our ambition. Plan in the next four years to go from serving 6 million to serving 36 million people. From supporting six to seven thousand health workers to supporting over 35 thousand of these health workers across Africa. That’s the goal and the aim to do it in just four years.
Denver: With this $50 million challenge grant, you’ve secured yourself a wonderful partner that is helping you meet that grant. Tell us about them.
Chuck: UBS. UBS has been a great partner, collaborator for both Living Goods and Last Mile for a number of years. They’ve made an extraordinary commitment to go out and help raise money from their high net worth client base, and to match that themselves with money from their corporate foundation, which is called Optimus. This is a terrific commitment. They’re one of the only banks in the world I know who’ve offered to match their client’s philanthropy. It really says something I think about them as an institution. The power of this for anyone who’s a UBS client is they’re going to get a double match. They can get a match from UBS, but they’re also going to get a match from this network of funders we’ve assembled. So, you have a potential for getting at least one-and-a-half times your investment.
Denver: You’ve probably never been involved in a collaboration of this order of magnitude. How do you think it changes everything as we begin to look at solving our social problems?
Chuck: This has come together literally just in the last six to eight months, and what I’ve just been blown away to see is that the power of these philanthropists coming together has been really extraordinary. These are all big philanthropies who do great things on their own. Let’s face it, collaboration is hard. It has to be give and take. Yet just in this few short months, we’ve seen how the strength, the collective voice, and the collective money of these funds which has come together has enabled us to take this ambition to a whole other level. It’s bringing to the table actors who were not coming to the table before– local governments, big multilateral institutions like the Global Alliance for Vaccines and the Global Fund to Fight AIDS, TB, and Malaria. Are all of those things a sure thing? No. But the collective voice of the philanthropists and these organizations working together is much more synergistic than to have each of them doing the same thing they were going to do on their own.
Growing big, working with partners, hiring great talent; if you’re not doing that, you’re not going to get there.
Denver: Let me close with this then, I just want to take those numbers of serving a million, then six million or five million, then 36 million; talk to us a little bit about scaling. So many organizations have great programs, great interventions, but they do not know how to scale. What have you learned about scaling up an organization? And what have you learned then about institutionalizing that and making it part of the fabric?
Chuck: I can say one thing first. A lot of people complain about the things that don’t scale. Let me just say about that, in the private sector, four out of five startups don’t make it. They don’t tend to complain about that. You’ve got to break eggs if you want to make omelets. It’s okay if some things don’t scale. I had to get that off my chest. If we don’t invest in some things that don’t work out as philanthropists, I don’t think we’re doing our jobs. Failure is okay. A lot of philanthropists are too cautious. It’s okay if some of your things don’t scale.
What are the big things that I think that are behind our thinking around scale? One is, I had the experience of rapidly growing a business, and so I knew what it takes to do this. First and foremost, from a people point of view. Hiring ahead of the curve is a big secret to how we do this effectively. We’re always hiring people who are two or three shoe sizes bigger than what we think we need today. Again, having flexible funding enables us to do that. Had we all restricted funding, you can’t do that. Smart, flexible funding is a key to be able to hire the kind of capacity you need.
Secondly, the kind of scale we’re talking about now is going to be vastly easier, more effective, and less prone to risk because of the technology. We can see problems faster, address weaknesses faster, and avoid the big problems that can come if your information cycles are analog. Frankly, there is also a willingness to pause if you have a problem. I have done that in my business life and in the social sector. You have to know when you have to take your foot off the gas when you’re having a problem.
A lot of organizations get into trouble. That happened to me in my business. We were tripling in size every year for our first six years. I remember my accounting teacher telling me: You don’t percents in the bank.. There’s a big difference between 300% growth when you’re going from 1 million to 3 million than if you’re trying to go from 100 million to 300 million. Again, I learned that the hard way. There is no better teacher than experience.
The other big piece about scaling that you brought up earlier was thinking about the landscape, the government institutions, and the partners that you need to scale effectively. To me, that’s the hard part. I’m reminded of an admonition that my father often repeated that he didn’t coin but quite often shared which is: There’s no limit to what you can accomplish when you make sure to give the credit to the other guy. Growing big, working with partners, hiring great talent; if you’re not doing that, you’re not going to get there.
Denver: Good words to end by. Chuck Slaughter, the Founder of Living Goods, I want to thank you so much for being here this evening. Tell us about your website and how people can help if they’re inclined to do so.
Chuck: You can find Living Goods at www.livinggoods.org. As you can tell from this conversation, scaling in the way we want, achieving this great outcome of saving kids’ lives is very much a team sport. We need money, yes. There’s a great opportunity right now because of this matching opportunity from our core funders. If you’re interested in engaging in this kind of work, there’s no better time from that point of view.
But more importantly, now to do the kind of scale we need, we need partners and advocates. So, if you work in public health, if you work at institutions like USAID or the Global Fund, if you work in research, yours are the kind of voices and support and collaboration and insights we need to take this from a great idea to something that’s institutionalized, that’s durable, and is going to be here for generations.
Denver: Thanks so much, Chuck, for a really interesting conversation.
Chuck: Thank you so much.
Denver: I’ll be back with more of The Business of Giving, right after this.
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