The following is a conversation between Doug Galen, co-founder and CEO of Rippleworks, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer in New York City.
Denver: An arena where there is huge demand but a very limited supply of talent is finding experts who have the skill and know-how to scale an organization. For those companies who have social good embedded at their core, this inability to scale can be a missed opportunity to help improve the lives of millions and millions of people around the world. But there’s a young nonprofit organization based in Silicon Valley that has taken up this challenge. It’s called Rippleworks, and it’s a great pleasure to have with us their co-founder and CEO, Doug Galen. Good evening, Doug, and welcome to The Business of Giving.
Doug: Good evening, Denver. It’s great to be here.
Denver: There’s a lot to talk to you about. In addition to Rippleworks, I want to prick your brain a little bit on human capital as well as the blockchain for social impact. But let’s begin with Rippleworks. Tell us a little bit more about the mission of the organization and how this idea got started.
Doug: The idea started with my experience of four different companies that I scaled in Silicon Valley and the challenges I had scaling those companies. It’s hard to scale a company. It’s a different skill set. So imagine what it’s like for a social entrepreneur or innovator who’s living somewhere else around the world that doesn’t have access to talent, and these entrepreneurs, these innovators, I strongly believe that they’re the ones who are going to solve our world’s toughest challenges. So we’ve got to find a way to help them. And that’s why Rippleworks was created is to help these entrepreneurs –if they’re lucky enough to figure out a solution– to scale that solution to drive impact.
Denver: What makes scaling so incredibly difficult?
Doug: First, lack of resources. You have to grow 5 times, 3 times, 10 times, whatever it is, and you don’t have enough resources, one. Two is, no one’s ever seen the challenges that you have faced when you’re scaling, when you’re just trying to keep the wheels on the bus. Your whole experience to this point has been: Do I have a product that people will like? Do I have a service? Am I improving lives? But now you have to go from improving a thousand lives to a hundred thousand lives, or a million lives. Those skills are not readily available around the world.
Denver: At your core, what do you do to help these social businesses scale?
Doug: Well we thought a lot about this. The first is, we don’t have enough talent around the world that has actually scaled. The talent is around, but the experience isn’t. So, we want to support organizations that will create new talent, but that takes 5 years, 10 years, 15 years. It’s generational.
But what do we do in the meantime? Where someone is working on a solution to be able to in the next year improve healthcare in Brazil, they don’t have time to wait for talent that’s going to show up in 5 or 10 years. So, we decided that we could go in, help that CEO understand what specific challenges they are facing, and then we’ll create a project to help them solve that problem with a twist. We bring in someone who has solved that problem before. Someone from Silicon Valley, New York, Austin, London, wherever, but who had no resources at one point, had to build something from small to big. These people today are sitting at places like Airbnb, Google, Facebook, KAYAK, wherever, and they actually will volunteer their time.
Denver: That’s fantastic. What an ingenious idea! So you go for the people who’ve been there, done that, and you bring them in to solve the problem. I think the process is fascinating, so I’m going to ask you to walk us through it a little. Number one, how do you define this universe of companies to begin with, the ones that you’re going to take a look at and do your due diligence on?
Doug: All companies are referred to us, and they’re referred to us by their funders. So, we knew that we could never find all the entrepreneurs in the world, but entrepreneurs are really good at finding funders. They are in search of the dollar for funding. We can identify all the funders. The funders are aware of us, and they refer those organizations in their portfolio that they think have the greatest chance to do good.
Denver: When they’ve done that, and you take a look at them, what specifically are you looking for to see whether they’re going to be a good fit for the Rippleworks network?
Doug: We start with: Is there a social heart; is there a social mission? There are some people doing wonderful things for students, but they’re doing it for the money. That’s totally fine. I’m a big fan of capitalism. We only want to focus on those that have a social heart. The second thing we look for is that there’s a CEO that we believe in. We think she or he will be wonderful and do good and actually have the capacity to scale. Third, is we look for metrics up and to the right that show that they’re in the middle of a scaling phase. They can be small; $100K, $1 million, $10 million, $100 million in revenue or people served or people that they’re helping, but we’ve got to know that they’re on the path of scaling because that’s where our expertise is. Then, there are a few other things. They need to have a team that can execute on whatever we’re going to help them with.
Denver: Whatever you’re looking for, you’re doing something right because I noted in Fast Company when they had their most innovative companies, seven of those companies were your partners. So, that was very impressive.
Let’s get to the other side of the ball a little bit. You said you tap these people in Silicon Valley who’ve been there, have done that. How do you go about that in finding those people at Google and Facebook and Airbnb and the others? Do they find you, or do you find them?
Doug: I think I have to take half a step back, which is to answer the question you first said. What we created is in theory not new. There are other organizations that have done this in the past, but they did a few things that we thought we could improve upon. The first thing we did is we want to help the best companies in the world because they have the biggest chance to actually drive change. If we’re going to help the best companies, we need the best experts in the world. The best experts are gainfully employed. They have amazing jobs. They may be at fast growth companies themselves. They’re investing. They’re making incredible amounts of money.
So a lot of people in the past, when they tried to reach out to these volunteers or experts, tried to get them to take a sabbatical. Tried to get them to leave their job. The best of the best aren’t going to do that. So, we created a program that allows you to keep your day job and volunteer. There were two secret sauces that we found out that made it work. The first, these experts have never had anyone vet companies for them. They don’t know how to pick what company that they should volunteer their time for. They now have Rippeworks to take care of that.
The second is that these experts are so busy, they need someone to manage the project for them. They can’t just come in and do it themselves. They could, but they probably will fail because they don’t have time. On the Rippleworks staff, we fund, and we have project managers who are the Sherpas for the experts. They’re the thought partners, and they help guide them through the process.
So, now to answer your question about how do we find these experts. Two or three degrees of separation is where two-thirds of them come, and then one-third come from us proactively thinking about: We have this need in Africa. We need this type of person who is a procurement person. Who could potentially have that skill? And then we go out and recruit those people. They get a phone call saying: How would you like to give your skills that you spend 12 hours a day perfecting… for good? And we have a very high hit ratio.
Denver: Did you ever wonder, Doug, at the beginning as to whether these experts would volunteer for profit-making companies? These are companies I know that have social good at their mission, but I think there’s a tendency in this country to think, “Well a nonprofit or an NGO, I’ll volunteer my time, but for a company that is a for-profit company, I don’t know.” Did you ever wonder about that?
Doug: Did wonder about whether people would volunteer for a for-profit, and that was quickly debunked because what the experts want to do is solve complex problems; they want to scale something, and they want to do a lot of good. They really don’t care if it’s a for-profit or not for profit. In fact, many of them say a for profit will then have a revenue model that can allow it to grow bigger and expand. I was pleasantly surprised, and I think the experts were wise in they helped me feel more comfortable working with the for profit because the platform to do good could be even bigger.
Denver: I think that’s one of the challenges of the nonprofit sector as they’re looking for talent. Millennials really don’t particularly care how you have structured your organization. It’s between the organization and the IRS. The nonprofit sector has sort of lost that monopoly, or that exclusivity on good, and they need to really change their game I think a little bit because of that.
Doug: I think another thing that happened is that nonprofits are so resource-constrained that when they have a big problem that they’re looking at and they want to solve, you bring in this high-powered expert who can solve that problem. Unfortunately, a lot of times, nonprofits don’t have the resources to be able to execute on the recommendations of the expert. So, it’s another reason why for-profits make sense. Now, having said that, we have 20% of our portfolio as nonprofits. We’d love that number to be higher, but we have two simple requirements. You must be an innovative organization, and you must be scaling. Those two are the requirements we don’t bend on because that’s our skills. So, we need more nonprofits that can be described as innovative and scaling.
Denver: Looking at your portfolio, how many of them are here in this country? How many around the world? And what sectors do they fall into?
Doug: We’ve done about 50 or so projects thus far in our first 3 years, and we’re going to do 50 projects this year.
Denver: That’s scaling.
Doug: We are eating our own dog food and scaling. 20% are in the United States, not by design. We are always looking for organizations, but given the state of what’s going on in this country, we very much want to allocate as many resources as possible to here. 80% are rest of the world, and rest of the world is broken up by Southeast Asia, Africa, Latin America for the most part. Sectors, we had a big debate when we started, but we’re actually sector-agnostic. We want to help entrepreneurs solve the world’s toughest challenges, so we are in healthcare, we’re in education, we’re in financial inclusion helping the poor. We are in green planet.
Denver: Give us an example of two of the kind of challenges some of these companies have been facing, and what Rippleworks and your team and network have been able to do to get them to scale.
Doug: I’d love to. Our companies are the heroes. I always love talking about them. One example would be Off-Grid Electric in Tanzania. Solar-powered lanterns. Solar-powered lanterns are very important in the world. Obviously, they reduce carbon emissions. Also, 4.3 million people a year die from hut lung. Hut lung is from breathing firewood. Firewood is used for reading and obviously for cooking. Off Grid Electric and other organizations as well has figured out how to deliver solar power lanterns to the world.
What Off Grid Electric needed to do is they had a call center in Tanzania, and they needed to grow it five times. That’s a tall order. It just so happened that we could help them with that, and we did that by bringing an expert, Nate Rosenthal, from Square who had built Square’s call center and customer support from the ground up. What an amazing talent to be able to have… to help design the call center of the future. So, in four months, analyzed their current call center and was able to recommend changes and enhancements, and then they started to implement in our time frame.
Denver: Give us another.
Doug: Another hero is in Africa. African Leadership University. Another wonderful organization. If anyone out there loves to get inspired by great CEOs, Fred Swaniker, amazing TED talk. Check it out. ALU has the audacity that they want to build the Ivy League of Africa. They want Africans to be educated in Africa, the best and brightest. Fred needed to fill his first class of paying students in his first campus in Mauritius. He didn’t have the expertise on digital marketing. So we brought in what Silicon Valley has called a growth hacker, someone who sits there and figures out how to find people online, and came to Fred, and we created a project to be able to set up African Leadership University on the tools. We then helped them create their first campaign. We then helped them analyze the results of the campaign; then we changed it and iterated it, and by the end of our four months, the knowledge was transferred, and they were running their own digital marketing campaigns.
The skills required are so different. First is, ridiculous flexibility, ability to deal with ambiguity. The ability to multitask, and the tenacious capacity to just keep working at it. You have to be proactive. You can’t wait to be told what to do. You need to be constantly thinking about: what can I be doing next. You have to be insatiably curious, and you have to be able to hold a machete in your hand in a jungle that there is no path. You have to create the path.
Denver: Let’s talk a little bit about human capital because as important as capital is to a lot of these startup organizations, human talent is really the number one challenge, I think. And you really understand the kind of person you need at an organization that has great ambitions, and it’s going to be growing and scaling quickly. Describe that person and the kind of things you’re looking for when you’re interviewing them.
Doug: “Scaling a company,” Reid Hoffman is famous for saying,” it’s like throwing a plane off the edge of a cliff and building it as its going down the cliff until it gets to the bottom.” That means the skills required are so different. First is, ridiculous flexibility, ability to deal with ambiguity. The ability to multitask, and the tenacious capacity to just keep working at it. You have to be proactive. You can’t wait to be told what to do. You need to be constantly thinking about: what can I be doing next. You have to be insatiably curious, and you have to be able to hold a machete in your hand in a jungle that there is no path. You have to create the path. It’s funny how everything I said… didn’t have one skill. It’s behavioral attributes. The skills can be taught. It’s these mindsets that are critical to be able to scale.
Failing in business only occurs if you don’t learn anything… the whole journey of the startup is: it’s getting you one step closer to understanding the answer.
Denver: It also sound like not being afraid to make mistakes.
Doug: As you know I teach at Stanford Business School, and I’m a big fan of lean startup methodology. It’s all about fail fast, and when we think of fail, in this country, we think of: you’re a loser if something has gone wrong. Failing in business only occurs if you don’t learn anything. The whole idea of business, and especially in startups and young organizations, is learn the most for the least amount of effort. That’s your ROI, which is: don’t over invest in learning. Do rapid prototypes. Don’t make them perfect. The whole idea is… what is it? Thomas Edison. I forget the stats; 999 times he failed, and then he found the lightbulb. But every failure wasn’t a failure. It got him closer to the lightbulb. That’s the whole journey of the startup is: it’s getting you one step closer to understanding the answer.
Denver: Speaking of Reed, wasn’t it Reid Hoffman who said, “If you do a prototype, and you bring it to market, and people don’t laugh at you, it means you’ve waited too long.”?
Doug: Yes. Reed is right. If they love it, that also means you overbuilt it.
Denver: You have done an incredibly comprehensive study on the blockchain for Social Impact.
Doug: You just said it. Blockchain. The day is complete. It’s in every conversation across America.
Doug Galen and Denver Frederick inside the studio
Denver: You’ve looked at 193 organizations and initiatives and projects. Before we get into what you found, maybe it’d be good to start by explaining what the blockchain is.
Doug: My journey on blockchain… Rippleworks was founded three years ago by an amazing donation by my co-founder, Chis Larsen and Ripple. Ripple was one of the three largest blockchain systems. It was a modest donation in terms of dollars, but a very large donation in terms of this thing called cryptocurrency which we’ll get into. From that, we have built our foundation. I have been very curious about all this noise we hear at every cocktail party. My Lyft driver, everybody, my dentist. Should I buy bitcoin? What do I do? So, I wanted to understand reality. Is it reality, or is it hype? So, that’s the journey that I went on.
Now, what is blockchain? If there was only one thing in 20 seconds that we could all understand is: cryptocurrency and Blockchain are not the same thing. Cryptocurrency is what we all heard of as bitcoin, which is the speculative asset that people buy and sell. It’s fascinating. There are now 1,500 cryptocurrencies, but what’s underneath it is the blockchain. Blockchain is the technology that enables cryptocurrencies. So, that’s the thing to remember is to separate those two. And the technology underneath blockchain is fascinating because it has amazing potential to make our lives better.
Imagine a world where you can get that money directly into the hands of the refugee, and you can see that it went there. That is powerful.
Denver: Let’s talk about that a little bit. In this report you did in concert with the Stanford Business School where you teach, you identified four distinct areas where there is promise and potential to the blockchain. I’m going to ask you to say a word about each, starting with transparency.
Doug: The concept of what blockchain can do is: it makes everything available for you to see, and that’s transparency. Today, if you send money into relief… send it to refugees, 30% of that money is lost due to the corruption. Now, imagine a world where you can get that money directly into the hands of the refugee, and you can see that it went there. That is powerful.
Denver: It’s about $150 billion. Therefore, you’re talking about recovering nearly $50 billion of it, which is incredibly significant. Second thing was immutability. You have got to explain that one.
Doug: Immutability. That’s tamper-proof. That means fraud protection. And the concept there is: once the information is entered into this database, blockchain, it can’t be changed without the whole world seeing it. So, it’s tamper-proof, and that becomes really valuable in an example like voting where there’s a ton of fraud in voting. But now if you vote, and it can’t be tampered with, then that has profound implications on democracy and governance around the world.
Denver: Lower cost payments. That’s a real saver.
Doug: The way the world is set up today is: we live on a 70-year-old banking system where we actually can’t send money to each other. We have to send it through a bank, and then a bank has to send it through something called the correspondent bank, and if you think about email, way back many years ago when there was something like AOL and Prodigy, you actually couldn’t send emails to each other on different systems until someone came up with a protocol that we’ve all now heard these letters…. we don’t know what they stand for– SMTP. The blockchain has created the protocol to move money. Now, instead of going through banks… two days to settle as we all know; paying huge forex fees when if we go around the country and travel outside the country. All of that goes away because you can now transfer money in seconds, and you can designate exactly where it goes.
Denver: I don’t know if this is an obvious question or not, but what do the banks think of blockchain?
Doug: Pros and cons. Banks have tremendous issues with float around the world, and they have capital spread all the around the world that they have to keep locally. So, Bank of America in the United States sending money to Bank of America in Mexico is not an easy thing. So it actually improves their liquidity. Now, the little guys in the middle that we haven’t heard about, the correspondent banks, they’re in trouble.
Denver: Speaking about banking, there are 2 billion people who are excluded from the banking system, and the fourth promise of the blockchain is identity. Talk to that.
Doug: The concept of digital identity is: in this country, we have what’s called a FICO score which allows us to score ourselves for credit. We also have the Social Security number. The rest of the world doesn’t have that. So, if you had a way that you could know who someone is, and then you could use that to be able to access all sorts of banking products, that could dramatically reduce the cost for people who are living on the edge of starvation and poverty and paying black market rates.
Denver: The other interesting thing about your report is that the promise of the blockchain is really much closer than I think most of us think.
Doug: It was really interesting. We wanted to understand reality or hype. We looked at these 193 initiatives. All these initiatives were for good. There’s hundreds, if not thousands, of other initiatives, but we only had focused on blockchain for good initiatives. What we found is we grouped them into: is it something that could happen in the next six months, the next year, or is it more than two years out? We actually found that 56% of these projects can happen within the next year.
So, these tests and pilots are underway. Democracy and governance was the sector. We analyzed this by sector that was the closest in to have a real impact. State of Montana has used blockchain for out-of-state registered voters to be able to vote, and there’s 2 million voters in this country who are registered that are out of country, and only 93,000 of them vote. So, that’s just a use case here in this country, let alone the use cases going on in other parts of the world.
Denver: The report also indicated that in terms of use, health was first, financial inclusion was second. But philanthropy and aid and things of that nature were third. What do you think blockchain is going to do to the philanthropic sector?
Doug: Transparency, that very first one. It’s going to become very clear that I know where my money is going. So, that will make a lot of us more comfortable to donate. That’s the number one benefit. Then there is areas around philanthropy where you can know the supply chain of items. There’s philanthropic efforts… South Africa’s school is reimbursed by the government. It’s subsidized by the government for attendance, and the blockchain is being used there to be able to monitor exactly who attends school. Now that that number can’t be tampered with, they’re getting subsidies quicker, which is far better for the schools.
Denver: This conversation reminds me of one we could have had back in 1995 about the internet that you don’t already know what’s coming, but you know it’s going to be big. You just don’t know exactly what it’s going to be, but the promise of potential is out of sight.
Doug: It’s interesting, I was around in 1995, 1996. In fact my co-founder, Chris Larsen, I was with him in building Eloan in ’96, and that was my first taste of a brave new world of something new. Then I got to feel it again with mobile, and I’m feeling it all over again with blockchain. I think blockchain could surpass all of it on the impact over the next decade.
Denver: I think you’re probably right. You would know better than I.
Let me close with this Doug. So often, when you bring people together in a new configuration like you have at Rippleworks, and in this case, these tech experts in Silicon Valley are working with CEOs of high-growth social ventures, many in the developing world, things happen or occur that you had not expected. Has anything surprised you that you hadn’t anticipated when you first launched Rippleworks back in 2015? And that includes you.
Doug: I think we’re in a tough time in this country. I really don’t like how Democrats and Republicans are beating up on each other, and people aren’t listening, and we aren’t working together. I’m a little humbled by Rippleworks, and I’m humbled by our experts. There’s one expert in particular who is a CMO of a major company. He is probably one of the best experts I’ve ever worked with. When he finished his project, he had to stand up, walk around the building for a little bit because he felt he got more out of this project than the company that he just dramatically changed.
Our experts have been profoundly impacted by the work that they do. They’ve gotten a taste of doing good. They’ve gotten a taste of helping the world and working outside of their four walls. I say by far, I’m humbled by the impact that this is having on our experts. I know the impact it’s having on our CEOs, and it’s very important that we help them scale. But the personal level, and that’s the dream of how we bring the world back together is to expose more people. That’s been quite wonderful and fulfilling.
Denver: That’s a wonderful way to close.
Doug Galen, the president and CEO of Rippleworks, I want to thank you so much for being here this evening. Tell us about your website and the information you have there, and maybe if there are experts listening, how they perhaps can get that same warm feeling.
Doug: Rippleworks.org is the place to go if you’re an entrepreneur… or you’re an expert who is curious about learning more to give back.
Denver: You have your whole portfolio there as well, correct?
Doug: We do indeed. You can click on the portfolio tab and see all the great organizations that we have helped. Again, the organizations are the heroes. The experts are the heroes. Denver, thank you so much for inviting me and the work that you’re doing for philanthropy and social impact.
Denver: This was a real pleasure. Thank you so much, Doug, for being on the program.
Doug: Thank you.
Doug Galen and Denver Frederick
The Business of Giving can be heard every Sunday evening between 6:00 p.m. and 7:00 p.m. Eastern on AM 970 The Answer in New York and on iHeartRadio. You can follow us @bizofgive on Twitter, @bizofgive on Instagram and at http://www.facebook.com/BusinessOfGiving