Who Owns Private Prisons? Part I

This summer I read the 2015 Mother Jones expose of privately run prisons in the United States (thanks Ben Mayer). Two things I learned:

1. Private prisons may be the worst thing going in America, Donald J. Trump included.
2. Private prison stocks are probably included in your retirement fund, as are mine.

Curious to hear more? Read the rest here.

Want to understand the US election? Watch the Walking Dead

Wait, hold on–don’t actually watch The Walking Dead. It’s terrible. But it is a guilty pleasure for me and for my brother, a PhD student in philosophy and religion. I watch it to get him to explain to me the difference between Rousseau and Hobbes, and to laugh at yankees who fail at Southern accents. Here’s all you need to know about the show: A zombifying virus spreads all over the world. Roving herds of humans have to survive under constant threat by roving herds of nasty zombies and roving herds of nasty humans. Six seasons of that.
What’s intriguing about the show is that different groups develop different rules for how to survive. One be-the-change-you-wish-to-see-in-the-world character refuses ever to kill another human. Another group kills everyone they come across. Then there was this one called The Governor who, when one character asks him how he could kill another man’s children if he had his own, responds “Because they aren’t mine.”

 

Some of these groups win; others lose. Here’s the lesson for the 2016 political election: There are multiple ways to win. And winning involves three things: Explaining to people what game we’re playing, convincing them that you (and they) will win it, and then winning. Allow me to walk you through how the Republicans and Democrats are going about this.

Here’s the Republican story: People are bad news. If you’re not strong, other people will destroy you. You win by bring strong. I am strong, and I win. Join my team and we’ll go kick some butt. Don’t join my team, and you’re dead meat. No seriously, we might have to eat you. There are zombies out there and I’m almost out of bullets.

Here’s the Democrat story: People aren’t that bad. If everybody chooses to trust everybody else, and give up just a little bit of self-protective power, we can build a system in which nobody gets screwed. It’ won’t be easy and you won’t get to kick anybody else’s butt, but you won’t have to worry all the time about your own butt getting kicked. If everybody cooperates, then cooperation can work.

How’s this playing out? Trump’s story is working. The Democrats’ story isn’t–because Americans have lost faith that the game is fair. Blue collar workers, #blacklivesmatter protestors, and American children with undocumented parents all feel like they’re getting their butts kicked. And even if they aren’t, they have politicians on both sides of the fence constantly telling them that they are. We never win anymore! The system is rigged!

So which story is right? To decide that, I think we have to go all the way back to the core belief that each story tells about human nature: Are we good? If we are, let’s all work together. Or are we evil? If so, lock ’em and load ’em.

I think the answer is “both.” I think the guys who wrote the US constitution thought the answer was “both.” Here is how John W. Gardner, who worked for LBJ, put it: “Man is a complex and contradictory being, egocentric but inescapably involved with his fellow man, selfish but capable of superb selflessness.” And here is where the story I’m telling diverges from the current Democrat one: Yes, cooperation is the beginning of building great things, but we can’t trust any human, or any system, to keep out that egocentric part of human nature. So we separate powers; we reject the divine authority of kings; we push for smaller government and break up big corporations. We choose to build a rules-based system on the international scale to move us toward a cooperative story, but we do it fitfully and over decades, knowing that beyond our borders the world is a bit nastier and more Hobbesian (see Walking Dead, The) than we wish it were.

We humans are fascinatingly complex and contradictory. That complexity and contradiction mean that we can do better than just figure out how to win the game; within the constraints of our own nature, we can decide what game we want to play. I choose the third: Believing that winning requires both cooperation and vigilance, and distrusting the accumulation of power anywhere and everywhere.  It means especially distrusting leaders–here’s looking at you, Trump–who tell the bleakest, most hopeless stories about who we are–and are willing to kill terrorists’ children (remember that?) simply because they’re not ours. We can do better than that, if we make the choice to do so and then act on it.

The Research Gap in Social Entrepreneurship

In the fall of 2014, I put together my first academic syllabus for a course on social entrepreneurship at the University of Texas Lyndon B. Johnson School of Public Affairs. It consisted primarily of articles from Stanford Social Innovation Review, chapters from Impact Investing: Transforming How We Make Money by Jed Emerson and Antony Bugg-Levine, and a few articles pulled from mainstream entrepreneurship and innovation research. It was a practitioner’s syllabus, but not a very academic one.

A few months later, I had a conversation about the class with Jonathan Lewis, a colleague from UnLtd USA. He asked, “How do you know if you’re having your students read the right things?” Though my experience in impact investing led me to believe that I was covering what students needed to know, the syllabus didn’t have an academic foundation. So Jonathan and I decided to dig for an identifiable core of academic research in social entrepreneurship. The more we considered the question, the more important it felt. An identifiable body of work could guide practitioners of social entrepreneurship, offer a common language for researchers, provide an educational path to those new to the field, and demonstrate that social entrepreneurship is a legitimate and distinct discipline.

Jonathan went straight to the data: Using Thomson Reuter’s Web of Science, an academic research platform, he identified approximately 500 academic articles related to social entrepreneurship and downloaded the metadata associated with each one, including other articles they cited. Then, using the data analysis tools SCI2 and Gephi, he created something called a document co-citation network. Document co-citation looks similar to the connections in a social network, but instead of showing connections between friends, it shows connections between articles cited within a single document. We identified 1,900 journal articles, conference proceedings, and books related to social entrepreneurship. Then we then looked for the ones that were most central to that network—meaning they were most often co-cited, and therefore most influential. This gave us the 25 most influential academic articles.

Read the rest of the post on the Stanford Social Innovation Review website. 

Visualizing the GIIN Impact Investing Network with Neo4j

Impact investing is a new and growing field in which financial institutions and individuals invest their money not only for financial return, but also for social and environmental impact.

The field is in such a state of rapid growth that Antony Bugg-Levine and Jed Emerson, two central players in this arena, recently described impact investing as a “dark wood” whose boundaries are in flux and definitions are contested.

I have been working in impact investing for much of the last half-decade; so when my RGK Center colleague Clare Zutz asked me how she could learn more about impact investing in food and agriculture, my response was to point her to individuals knowledgeable about the state of the field, rather than the industry.

Something clicked for us both – the information is out there, but it isn’t easily accessible or visible, especially to newcomers and outsiders. What if we used a graph to help people see and access this field?

Read the rest of the post on the neo4j blog

Response to “The Payoff of Pay-for-Success”

The future of PFS,” argue V. Kasturi Rangan and Lisa A. Chase [in The Payoff of Pay For Success], “lies in aligning with impact-seeking investors, not return-seeking investors.” Should it? Or should Pay-For-Success (PFS) designers continue to make an effort to bring return-seeking capital to the table? Based on the principles of the organizational theory of robust action, we believe efforts should be made to attract return-seeking investors—but only as long as their criteria of success (financial return) doesn’t sideline the success criteria of other actors including governments, service providers, and particularly the end beneficiaries affected by PFS contracts.

Read the rest of the post on the Stanford Social Innovation Review website. 

Latino Startups to Watch in 2014

This article was originally posted on Vista Hispano as part of a series on Latino startups. For the rest of the series, go here.

When Peter Wilkins of New Futuro set out to raise a round of venture capital this year, he found very few investors that understood his target market: US Hispanics. In the VC community, he still says, “there is no one that I know of focused on Hispanic market companies.”

That lack of understanding on the part of investors hasn’t slowed down New Futuro. Through its events, resources, and online community, New Futuro now provides educational advice and material it says reaches millions of Hispanics every year. In the footsteps of companies such as HolaDoctor, Xoom, Progreso Financiero, and Consorte Media, New Futuro is part of a new crop of Latino market startups that are raising cash, building teams, and charging into the Latino market.

The most active sector for Latino market startups is financial services. Regalii, led by Wharton MBA and Echoing Green Fellow Edrizio de la Cruz, follows in the footsteps of iSend in allowing families to have some a say in the spending of remittances. Currently in beta launch according to its website, Bucks Bill Pay allows customers to pay their bills in cash at local agents. And Juntos Finanzas, a product of Stanford d.school, empowers Latino customers to track their own expenditures by SMS, similar to India-based social enterprise InVenture.

Along with New Futuro, another crop of Latino market startups focuses on education: YogoMe is an educational app with plans to move into language learning. Backed by 500 Mexico City (which announced its new batch of startups just last week), YogoMe is one example of how companies are pulling in resources from both American and Mexican startup ecosystems. Sleek-geek has three educational tablet apps for teachers, and is one of seven companies in the first Manos Accelerator cohort that includes Antonio Altamirano’s InteresantePlaza Familia is another educational venture founded by Latino social media veteran Ana Roca Castro.

Beyond financial services and education, immigration services platform LexSpot has raised over half of its $750,000 convertible seed round. YaSabe, another 500 Startups portfolio company building a bilingual, local search engine, closed a $2.7M funding round in the first half of 2013. AssuredLabor, based in NYC and with operations in Brazil and Mexico, raised $5.5M earlier in 2013 to expand its job-seekers platform.

Keep an eye on these companies in 2014–no doubt at least one of them will soon stand with Xoom and others that have built successful businesses by serving a large and growing US Hispanic market.

The State of Latino Startups: Exploring the Challenges

This blog was originally posted on Vista Hispano as a series on Latino startups. Read the first one here

Startup struggles, generally speaking

If there is one topic that entrepreneurs love to talk about more than any other, it is be the trials and tribulations of being a founder. You work impossibly long hours; you wake up with cold sweats knowing that every moment you’re not working on your idea, your competitor is. You spend more time managing people than you do with the product that you wanted to build; you are constantly reminded by more ‘reasonable’ friends and family members that you are sacrificing prime earning years to chase a dream. Money is always in short supply, and no one–no one–can ever truly give you the peace of mind that you are doing it right.

In nearly one hundred conversations about Latino startups over the last eight months, I’ve also heard and identified a handful of other hurdles specific to Latino startups. Some of them are relevant to Latino founders; others are particular to startups whose primary customers are Latinos.

Latino founders’ uphill fight for funding?

Latino founders, just like their non-Latino counterparts, point to the lack of high-risk capital as a significant barrier to the growth of Latino startups. Unlike in conversations with white founders, however, hints at racial bias among funders are pretty common in conversations with Latino founders. Few accuse venture capital investors of outright racism. Instead, they make two arguments. The first, voiced by at least one venture-funded entrepreneur, is that venture investors have the same subconscious racial bias that Chicago Booth researchers discovered among hiring managers in Boston and Chicago. Venture capital (VC) investors retort that if they see a strong team with a good idea in a growing market, they don’t care about someone’s race or country of origin. In fact, Silicon Valley is so dependent upon foreign talent that they now lobby ferociously for immigration reform.

The second, related argument is that the nature of many VC investors’ networks is such that black and Hispanic entrepreneurs are excluded not due to racial bias but because of the nature of social networks. In a recent conversation about the opportunity for a Latino-focused startup fund, one VC asked me if I was saying all VCs were racist. “No,” I said, “We’re lazy.” When some VCs proudly trumpet that a resourceful entrepreneur will find the right introduction to them, they are trusting their network to complete the first round of vetting of potential startups. In the aggregate, such a closed-network approach to deal-sourcing means out-of-network ideas are shut out until someone (a “broker” in network theory) connects them.

Before they approach VCs for scale-up funding, however, Latino founders point to another gap in funding. Unlike founders from well-connected, wealthy backgrounds, Latino founders have fewer wealthy friends and family members waiting in the wings to pump $20,000 into their startup. One Latina founder told me that, as the most educated and successful member of her extended family, asking her family for money would be laughable; instead, she is expected to be the one with a steady job providing cushion for everyone else. In this way, Latina founders, already carrying much of the weight of the growing Latino startup community, may be loaded down even more than their male counterparts by familial expectations.

The Latino market: large, nuanced, tough

What of startups that are not run by Latinos but focus on the Latino market? They too, face special struggles both in financing and execution. In seeking financing from VCs, Latino market startups struggle to get attention from investors rightly inclined to fund what they already know–e.g. tech, life sciences, solar, mass market retail, defense. Why educate yourself on a new, unproven market, exposing yourself to even greater risk? The answer, of course, is that not only are Latinos a large and growing group of upwardly mobile young consumers, but they are early adopters of new technologies and bellwethers for shifts in consumer trends; but as Antonio Altamirano points out, this case has yet to be made in a clear and compelling way.

Even given funding, Latino-focused startups face a special challenge: the Latino market may be huge, but it is incredibly nuanced and diverse. Most obviously, Latino market startups have to balance the needs of English-dominant and Spanish-dominant customers; the fluently bilingual customer support and content creators required to do this are tough to find and harder to retain.

Yet both Latino founders and those interested in the Hispanic market are plowing ahead. One example of such forward momentum is Manos Accelerator, which has recently accepted their first cohort of Latino startups. In our next article, we’ll take a closer look at a few of the Latinos and Latino-focused entrepreneurs blazing the trail–if you know of a few, send them our way!

Where are all the Latino startups?

This was originally posted on the Vista Hispano blog.

The US Hispanic consumer market is bigReally big$1.3-trillion-dollars-and-counting big. Major corporations like Best Buy, Yahoo, and The Home Depot are paying attention and have piled in, attempting with varying degrees of success to capture a piece of this large and growing market.

Over the course of the last six months, my colleagues and I have researched the Hispanic market with a specific hypothesis: Given its potential, surely there are dozens of startups launching clever, scalable businesses serving Hispanic consumers. As it turns out, we were (mostly) wrong.

Over a series of posts on Vista Hispano, I’ll discuss three elements of the Latino startup ecosystem: What barriers are blocking the creation of a Latino startup market? What startups are already plowing through those barriers? Where do they find the capital they need to start their business?

First, let’s clear up a bit of confusion about what we mean by Latino startups. When people say Latino startups, they mean one of two things: either startups operated by Latinos, or startups serving the Latino market. And when they say Latino startups, they mean either small companies with huge growth potential, or small businesses. The result is a conversation about four different types of companies, often all in the same conversation.

Latino startupsThe vast majority of businesses in the US fit into the bottom half of this matrix. Venture capitalists sometimes derisively refer to these small businesses as “lifestyle” businesses. But they are the blood pumping through the American economy, and Hispanics start such small businesses at a faster clip than non-Hispanics.

These companies are very different than the high-growth entrepreneurs on the hunt for venture capital or private equity investment–the companies we’re interested in here. Some of those companies, such as Marc Barros’ Contour, are Latino-owned but not Latino market-focused. Others, like pre-paid phone provider MetroPCS, find success by reaching out directly to Latino customers; but they are not Latino-owned. A handful of companies, such as Alicia Morga’s previous company Consorte Media, are both Latino-owned and Latino-focused.

Why do these distinctions matter? Because each type of business faces unique challenges, taps different sources of capital, hires a different type of employee, and demands a different set of skills. If we want to build a Latino startup ecosystem, driving resources to the entrepreneurs who create value and wealth in the Hispanic community, clarity of conversation is key.

In our next post, we’ll take a look at some of the challenges–both real and imagined–faced by Latino startups.

SVCO 2014?

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Prompted by Oxford professor Marc Ventresca, a list of potential topics for Silicon Valley Comes to Oxford in 2014:

  • Machine learningand its effect on different industries (automobiles & finance being the most obvious both in application and in local networks)
  • I heard quite a bit of noise at SVCO this year about Bitcoin. What about a virtual currency theme along with a fintech theme?
  • 3D printing would be a playful theme, with an emphasis on building real things rather than not apps
  • Building healthcare, how about genetics? Perhaps in conjunction with the Wellcome Trust
  • If we want to mimic the development of the internet, how about we track DARPA’s focus on robotics?