New Entrepreneurs Aim to Build
Socially Conscious Companies

By PAULETTE THOMAS
Staff Reporter of THE WALL STREET JOURNAL

Most business-school students, it is assumed, are plotting ways to launch a dot-com or high-tech enterprise onto the Nasdaq and make a once-in-a-lifetime killing.

But Cornell University graduate student Andrew Harwood is building a business that could actually spark positive social change. Mr. Harwood and two partners are planning a winegrowers cooperative in Virginia to help local farmers replace tobacco with grapes and wine-bottling. "It's a very emotional issue for the farmers, and it became so for me," says Mr. Harwood, whose father is from Virginia. "The farmers have pride in the region and the desire to pass the land to their children."

Mr. Harwood and his partners are among the 66 teams from across the U.S. who took part in a business plan competition for socially conscious enterprises. The competition, sponsored by the Haas School of Business at the University of California at Berkeley last week, is the only one of its kind, organizers say, but it is part of what they see as a growing network of entrepreneurs with goals that are loftier than stock-market windfalls. With its echoes of 1960s activism, it is so old-fashioned it seems new.

New Type of Business

Wayne Silby, co-founder of the Calvert Group, a Washington, D.C.-based socially responsible investment fund that has been around since 1987, is convinced that a new type of entrepreneur is emerging. "Unlike the old rich guys who wanted to just give away their money, the new rich guys want to be on the board [of socially responsible companies], and work on the problems."

A representative of his fund helped judge the competition, which awarded $10,000 to the winning team, but more importantly, will circulate the top three winners among a group of 150 investors who seek out socially responsible firms. The Haas competition required the businesses to be "mission-driven, self-sustaining and profitable" and -- the tricky part -- to show quantifiable social or environmental return on investment.

Tellingly, the organizers of this competition were the students themselves. "There's a huge amount of interest in these ideas at Haas," says Sara Olsen, a first-year Haas student and the chief organizer of the competition. Her committee of five organizers worked since October to get word out about the contest by e-mail to other business schools, and attending conferences wearing big buttons that said "Ask me about the Haas Social Business Competition."

Like many of the participants, Ms. Olsen is seeking a business degree because she wants to apply the rigors of commerce to enterprises with other goals. She worked for three years at a business owned by Southshore Bank, a community development bank in Chicago. The design company taught low-income teens on Chicago's south side to customize art and mass produce it as souvenirs. It was fulfilling. "I'm telling you, it was like clicking your finger against a crystal goblet," she says. "It was such a right way to do what we were doing."

The problem was, she said, that the group lacked the business expertise to make the enterprise grow. "And I thought that was a shame," she adds. "So I'm in business school to learn how to make little deals big."

Movement Takes Shape

Dan Geiger, a 1998 graduate of the Haas School, is a judge in the competition, and has launched his own do-good enterprise, OpNet, which trains low-income high-school graduates to build Web pages, and places them in higher-paying jobs. He sees a movement taking shape of savvy young entrepreneurs for whom making a difference is as important as making a profit. "It's the flip side of the dot-com stereotype," he says. "A lot of people who've done very well or are about to do well miss the meaning in their life, and are looking for ways to contribute."

Mr. Geiger acknowledges that measuring the social benefits of a business is a subjective exercise. "It's not black and white. We had these debates as judges. But we are trying to take these methodologies to a higher level as a result of this competition. We are trying to get more rigorous, to move this whole movement forward." In Mr. Harwood's wine-making cooperative, his business plan put a cash value on the increases in revenue for the farmers, reductions in government aid, increases in land values and even an economic kick from tourism.

Despite the touchy-feely social aspect of the competition, nearly half of the business plans in the contest involved the Internet or high-tech. A team from the University of California at Los Angeles sought funding for a company called easyDiabetes, which would offer a centralized, Internet-based diabetes data-management system. A team from Haas, Boost Technologies, plans to design and manufacture personal-computer-based devices aimed at the physical disabilities market.

Others are decidedly low-tech. Contest finalist Philip Askew hopes to launch Mind, Body & Soul, a chain of shops featuring massages and other treatments, as well as organic body goods. The plan from the second-year student at the University of Virginia's Darden School of Business calls for training mothers on welfare and other low-income people for the masseur positions, and offering benefits such as a company health-care plan, which those jobs don't typically include.

Caring About Employees

"The social component is actually at the core of this business," he says. "If we can't care for our employees and give them these benefits, they won't provide a level of service we need to make this a commercial enterprise."

Another finalist in the competition is Cafe Dalat, a gourmet coffee-bean enterprise aimed at improving the lives of subsistence farmers in Vietnam's central highlands. Part of the team is Matthew Schroeder, a first-year Haas student, who spent two years in Vietnam doing analysis for American investors. "Working in the developing world, there's no way in your heart you can be exploitative," Mr. Schroeder says. One difficulty for businesses with a social mission is attracting the first investor, which can attract others. "We thought this contest was a good opportunity to present our project" to first-round investors, said Tom Miller, an attorney on the Cafe Dalat team. "We think we have a good chance to make it."