Q&A with Entrepreneur Marc Blumenthal
While traveling in South America, Marc Blumenthal of Portsmouth became aware of not only the severe poverty in the region but also the inadequate manner in which it was being addressed.
A serial tech entrepreneur, Blumenthal wanted to challenge what he calls “the poverty eradication industry,” populated by governments and nonprofits, and started the Social Ventures Foundation, an organization that highlights businesses and startups which address social problems that enhance the livelihoods of people living in poverty.
The foundation is now in the process of forming the EndPoverty Fund. The publicly traded fund will direct investments to businesses and startups that have developed sustainable products, services and job programs regarding clean water, housing, health care, energy, food, transportation, education and communications.
Q. What prompted you to start the Social Ventures Foundation?
A. I saw a lot of poverty wherever I went, especially in Third World countries, and I never could understand why there was poverty. If folks who were poor were included in the free enterprise system instead of being excluded, this would create more consumers and businesses would benefit. This is an industry, the poverty reduction industry, and it’s being managed by government and nonprofits, not businesses.
Q. What made you decide to challenge the existing paradigm?
A. I noticed this disconnect with the business sector and the poverty reduction sector. If you look down in Venezuela, the government ran the poverty reduction industry.
I started to investigate a number of these industry leaders of the old paradigm — the World Bank, USAID — and I started to talk about how businesses could enter into this industry. My takeaway was businesses thought poverty reduction should be delegated to government and government felt it should be in control and not deal with business. It was almost like there was a firewall between the two sectors, and it didn’t make any sense to me.
Q. Why is the current paradigm not working?
A. Government is not sustainable. They are always going to be looking for money to do what they’re doing and justify it. Businesses are churning money and making profit and cash flow. In Venezuela, businesses let government run the poverty reduction industry and the government traded votes for handouts. Now businesses are out of business.
Why are they distributing more and more food to more and more people? Because there are more and more people hungry.
The more businesses we can involve in thinking in this new way, the sooner we can change the paradigm.
Q. How do you encourage businesses to focus on poverty eradication?
A. Just through a conversation with businesspeople. Right now, you’re contributing to the poverty reduction industry through your back door, through donations. I want to tap into these folks and say you can come up with ideas — that is, a product, service or job program — that can lift the poor. It doesn’t have to be a big part of your business, but something, and that will be more effective than what you’re doing — paying taxes and letting the government handle this issue. I’m not putting down the folks in government, I’m just saying it’s not sustainable and if we want to change this paradigm, we have to be sustainable.
Q. How do you envision an existing business adapting?
A. In serious but little ways. If we’re talking about a large company, if there was a wheelhouse for speaker systems, could they put an engineer on the task for making a hearing aid for under $50? They wouldn’t make a gazillion dollars, but they could say, “We’re helping this effort.” Not just a donation or brand affiliation, but putting the rubber to the road.
Q. Why should businesspeople do this?
A. It’s going to help them in the long term, they’re going to have employees that gravitate to the company and there will be millennials that join because they are focused to some extent on doing business with a purpose.
Q. What’s one example of a business with a purpose?
A. Aldelano is one of the earlier pioneers. Its founder, Jim Chew Alfred Hollingsworth, came up with a solar-powered water and ice-making self-contained product, which is a small trailer that can produce water. And if you look at the major needs of the poor, it’s water and refrigeration.
Q. Why should businesspeople do this?
A. They wake up every morning feeling good about themselves. This runs through the whole theme – everyone has passion in entrepreneurship. If you have a business with a purpose, your drive is even more so. I’m not trying to alter what people are going for, but I think combining the two is something that can work. It’s not that you’re putting aside the means to make a living, but there’s more to life than making money.
Q. How is the formation of the EndPoverty Fund coming along?
A. Putting the investment fund together requires money so we’re looking to raise money to pay the legal and development costs associated with the fund. We’ll have the fund structured and rolled out by the next summit in November, but you can donate to the Social Ventures Foundation and we’ll buy shares and hold them in perpetuity, or you can buy shares. We don’t want to default to a typical nonprofit, but we do need seed funding to put this model together. Right now it’s been self-funded with volunteers and money I’ve put in, but we are going to go to the community to ask for support to continue our efforts and build this fund.
Q. Tell me more about the virtual summit.
A. Last November we held a virtual summit because we realized a there were a lot of people from around the world who couldn’t afford to travel. We had a good collection of folks – people from Africa, India, South America and U.S. – and everybody had a business and had a heart. I think we’re all in this together in this planet and we can change this paradigm. We need the best brain matter in the community to focus on this. I welcome everyone’s participation.
Marc Blumenthal can be contacted at email@example.com.