Category: Strategy

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“Hunter is disruptive…”

This post was written by Henry Vogt ’19

“Hunter is disruptive” is the phrase we first saw as we walked into our second guest lecturer of the semester.

Earlier this Fall we had the pleasure of hosting guest speaker Hunter Lovins. Suffice it to say, she knocked our socks off. I had heard Hunter’s name before, but wasn’t very familiar with her work or legacy. It became apparent right away that we were in for a unique and inspiring experience.

Hunter’s body of work in sustainability and climate justice is prolific: from starting numerous influential non-profits, creating successful sustainable MBA programs from scratch, authoring best selling books, founding impact investing firms, and consulting with some of the largest corporations in the world including Unilever and Walmart, Hunter’s influence is extensive. This is augmented by her down-to-earth, Colorado ranch-style demeanor. She tells it like it is, passionately, in an inspirational way. She’s the type of person that understands that solving world problems is best facilitated over a whiskey, face-to-face. Hunter also owns a beautiful ranch in Colorado, where she easily could spend all of her time but instead chooses to be on the move, committed to her mission.

I asked Hunter how she envisions American capitalism evolving and whether she believes it has the capacity to solve the massive challenges facing our planet under current frameworks. She answered by giving a prediction from economist Tony Sebens: “Within 10 years, economics will dictate that the world will be 100 percent renewable. For this to happen, the world’s economy will be disrupted. This will be the ‘Mother of all disruptions.’ In other words, to save the climate we have to crash the global economy.”

If this is, in fact, the case, then the next decade will be tumultuous to say the least. This led our class session to focus on the question of what’s next and how do we collectively begin to prepare for this disruption. While this notion and idea can admittedly be not very uplifting, it was encouraging to hear suggestions from many of my classmates on how we may leverage our global economy and invest in Base of the Pyramid projects to find solutions and begin to strategize on how we may “soften the landing” from major global disruption.

Overall, having Hunter present to us was inspiring and eye-opening. While there are massive challenges ahead, having individuals like Hunter who are disruptive, driven, and committed to finding solutions to these challenges provides hope for the future.

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In The News: Our Class in Entrepreneurial Business Models

“Across the Fence,” a long-running news program on WCAX here in Vermont, recently profiled The Sustainable Innovation MBA program.

The focus was on Professor Erik Monsen’s “Crafting the Entrepreneurial Business Model” course, the highlight of which is a business trade show featuring the students’ ideas for new, disruptive business models.

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How Business Can Support Refugees

This post was written by Ryan Forman ’19

All around the world, refugees are being demonized for various political reasons. There is overwhelming academic and professional research into how much value refugees are to society. Therefore, civil society cannot help them adjust to their new country alone, but business plays a role in supporting them as well. There are multiple ways in which business can help the current refugee situation, but this article is going to focus on two key methods.

The first way that business can help refugees is by investing in refugee-owned/founded businesses. Research shows that refugees are more likely to hire fellow refugees. Because of this investment, businesses can support more than just one refugee; they can help many others get hired as well. One example of an impact investment organization that specializes in investing in refugee-founded businesses is the Refugee Investment Network (RIN). The RIN works to help move private capital to investment in financing of companies that benefit both refugees and their host communities.

An additional way that business can help refugees is by advocating for them in the workforce. Advocating for refugees could be businesses partnering with both governmental and non-governmental organizations that will help individuals get the skills that they need to be more competitive in their local job market. Ernst & Young (EY) in Germany have gone above and beyond in how to support refugees. EY Germany states, “Through EY Cares, the team got funding for a language-learning app, developed by an employee of EY Germany. The team has also supported Kiron, a social start-up providing higher education to refugees, and it has launched a pilot internship program for 10 refugees across EY Germany.” There aren’t many examples of this in the United States, but there is a similar situation here in Burlington at Rhino Foods. Advocating for refugees could be looking at leveraging their past skills to hire them for similar roles in a business that they did in their former country. According to Rhino Foods, “The cultural diversity at Rhino exposes us to each other’s favorite foods, traditions, and life experiences.” Currently, refugees make up 37% of Rhino Food’s workforce.

In our Entrepreneurship class, my group has proposed creating an incubator that would help address both of these methods to help refugees. We think that an incubator, that supports both investment in refugee-owned businesses and partnerships to help refugees get the skills they need to become competitive in their local markets, is a needed organization. I would certainly like to see more organizations place such an emphasis on, as RIN has described, “the greatest social challenge of our time.” Refugees are a boon to the local economy, and it is time for business to empower them.

Photo by Perry Grone on Unsplash

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The Role of Business in Combatting Homelessness

This post was written by Chris Hynes ’19

Homelessness is a topic that is rarely talked about as a major issue in the realm of business, but in the light of sustainable innovators, there is a major opportunity to make a difference in improving the homeless issue that is rising in America.

With the increasing gap in the distribution of economic wealth in the United State along with the increased cost of living, the poverty line is growing, which is putting the former lower middle-class families in extreme risk of becoming impoverished and economically unstable. If intervention is not taken soon, then there is a huge likelihood that the homeless population in America will increase.

Business has a unique opportunity to aid families and individuals that are suffering from homelessness and empower them in so many ways to move out of their current situation and into a more stable environment. In order to do this, businesses need to take a more social approach and become more socially conscious.

There needs to be more than simply non-profits helping marginalized individuals and families. Non-profits combat homelessness as much as they can, but finding employment opportunities for individuals whose barriers to entry into the workforce are much more skewed than the “normal person” who is applying for a job, is not only difficult, but in most areas, almost impossible. This is due to the fact that a lot of businesses are focused on economic success (which is needed), but lack a genuine social mission.

People generally think that public policy can fix this, but in reality, most government aid is focused on getting people suffering from homelessness off the streets and into housing as fast as possible. Think about it for a second — once a person leaves a homeless shelter and is gifted an apartment, bills begin to pile up. Without a job that is constant enough to provide economic stability, the individual has an extreme risk of falling right back out onto the street. This, in short, is an example of how cruel the poverty cycle is in America.

Now, if there were businesses that were focused on social well-being and provided an empowering job opportunity, then this cycle could be closer to being broken. Having a core competency around inclusive hiring will engage new stakeholders, as well as boost the overall impact that a business can have on a community.  I challenge everyone who is reading this to think more critically about the true impact that their business could be having on a social impact level.

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The Cost of Disruption — Loss of Community?

This post was written by Travis Smith ’19

Improving efficiency for consumers through digitization is one of the main sources of disruption and innovation within the marketplace. The goal – reduce the amount of time waiting for something or reduce the need to go somewhere for something. I believe this is rooted in a positive notion of improving the convenience of people’s’ lives so they can go about their day in a fashion they so choose. However, it may be time to look at what we are streamlining in order to make life more convenient – community. Losing those small conversations with strangers at the store might make life more streamlined, but the loss may also have the unintended consequence of chipping away at community.

It’s never been easier to order goods, food/groceries and socialize without ever leaving one’s home. As a society, we are moving more towards a world where we don’t have to do anything or go anywhere that we do not want to. Yet, according to the Washington Post, the US has consistently fallen in world happiness rankings and currently sits at 18th place. Furthermore, Americans are losing touch with their communities. Pew Research found that only 24% of urban residents know all or most of their neighbors; this is alarming as our society becomes more urbanized. Here we find a paradox. We are more connected and life is more convenient than ever, but somehow, we know less people directly around us and our happiness levels are falling.

The question should be asked, are there diminishing returns on efficiency as there are with wealth? What will we do with the extra time gained? Yes, our society went through a similar transition with the rise of big box retailers, but at least we were still going to a physical place to interact with physical people. Now there is no store with people, but a website with a chatbot.

One surprising example of a community oriented disruptive technology is Pokemon Go. The technology of augmented reality has upended the mobile gaming industry. Yet, Pokemon Go uses the augmented reality tech to bring gamers together in a physical space as users must make friends and interact with others in order to advance in the game – thus, building community. The game even has a once a month “community day” where users are encouraged to meet up at public parks for several hours and play together.

There doesn’t need to be a binary choice between technology and community, but As entrepreneurs and future business leaders we should ask ourselves – will my product or service help build community or chip away at it? As consumers, will we replace our time spent at a post office, grocery store, or restaurant with other time spent building community?

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The Cap Raise: Valuation

EDITOR’S NOTE: This article is a collaboration between Cairn Cross of FreshTracks Capital and Diane Abruzzini ’17 of VENTURE.co Holdings, Inc. It is one of a series we will be publishing concurrently with FreshTracks Capital.  Cairn Cross co-founded FreshTracks in 2000, and has worked as Managing Partner of the firm since that time. Notable FreshTracks VC investments include SunCommon, Mamava, and Eating Well. Cairn has helped to build a true Vermont entrepreneurial ecosystem by hosting pitch events, accelerator programs, workshops, and teaching at multiple Vermont universities and colleges. He is a former co-chair of The Sustainable Innovation MBA Advisory Board.  Diane Abruzzini has built her career as a food and agriculture entrepreneur and business consultant. She was a student of Cairn Cross during her time at UVM’s Sustainable Innovation MBA program. After completing her degree, she spent time working for FreshTracks partners as an analyst. She currently works in marketing and communications at VENTURE.co Holdings Inc, who’s wholly owned subsidiary VENTURE.co Brokerage Services LLC is a FINRA-licensed broker-dealer.

The valuation process can be murky for both entrepreneurs and investors. Private company stock is typically a “Level III” asset under ASC Topic 820 and its value “cannot be determined by using observable inputs of measures such as market prices or models.” Fair value is estimated rather than observed through readily observable market prices.

Entrepreneurs and investors often disagree on the valuation approach that should be used in a particular transaction. Should one base a private company’s valuation on the comparable metrics for publicly traded companies operating in the same industries, or should one base valuation on the estimated present value of a projected stream of cash flow? If you use public market comparables, which metric is most important to valuation? Revenue? EBITDA? Users? Growth Rate? If estimating the net present value of a stream of cash flow, which discount rate do you choose and are you being too aggressive or conservative in cash flow estimates? Do you arbitrarily choose the mid-growth position? Every entrepreneur, venture capitalist (VC), broker-dealer (BD), and investment bank will use a variety of criteria in order to determine valuation. None of the approaches are perfect–there is no secret sauce–but there are important differences to how VCs and BDs tackle company valuations.

First, we must consider to whom VCs and BDs have responsibilities. VCs are trying to create strong investment returns for the Limited Partners (LPs) who are the investors in the VC fund. Valuation and other terms such as dividends will be negotiated to give the venture investors an investment return commensurate with perceived risk. Before making an investment, VCs rely on the business plan and financial projections supported by company documentation as well as prior investment experience among the VC partners and external due diligence efforts to determine a reasonable company valuation. Continue reading “The Cap Raise: Valuation”

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The Sustainable Innovation MBA Co-Hosts Global CEO Forum

On a beautiful autumn day in mid-October — the kind of day Vermont is famous for — the International Academy of Management came to the campus of UVM to host the Global Forum on Sustainable Innovation and Business Transformation.

The event, co-hosted by the Grossman School of Business and The Sustainable Innovation MBA program, featured a keynote speech and conversation with Muhtar Kent, chairman of the Coca-Cola Company. Our MBA students also had the opportunity to listen to and network with some of the U.S.’s and Vermont’s most innovative business leaders.

Kent, who has made innovation and the transformation of Coca-Cola a vital focus of his time at the helm of one of the world’s most recognizable companies, told the Forum’s 150 attendees that, at Coca Cola, innovation flows from the power of partnerships — that the best ideas are often found on the outside.

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Kent also made the case that a “golden triangle” of forces — business, government, and social-mission organizations —  must come together to solve the world’s most pressing problems. Therefore, he said, business leaders must be master relationship builders.

The Forum also featured reflections by three forward-thinking business leaders. Mary Powell, CEO of Green Mountain Power; Brian Griffith, chairman of Griffith Foods; and Joey Bergstein, CEO of Seventh Generation, shared their own personal and organizational stories of transformation and innovation.

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The Cap Raise: Introduction

EDITOR’S NOTE: This article is a collaboration between Cairn Cross of FreshTracks Capital and Diane Abruzzini ’17 of VENTURE.co Holdings, Inc. It is one of a series we will be publishing concurrently with FreshTracks Capital.  Cairn Cross co-founded FreshTracks in 2000, and has worked as Managing Partner of the firm since that time. Notable FreshTracks VC investments include SunCommon, Mamava, and Eating Well. Cairn has helped to build a true Vermont entrepreneurial ecosystem by hosting pitch events, accelerator programs, workshops, and teaching at multiple Vermont universities and colleges. He is a former co-chair of The Sustainable Innovation MBA Advisory Board.  Diane Abruzzini has built her career as a food and agriculture entrepreneur and business consultant. She was a student of Cairn Cross during her time at UVM’s Sustainable Innovation MBA program. After completing her degree, she spent time working for FreshTracks partners as an analyst. She currently works in marketing and communications at VENTURE.co Holdings Inc, who’s wholly owned subsidiary VENTURE.co Brokerage Services LLC is a FINRA-licensed broker-dealer.

U.S. Companies in multiple industries seek private capital to kindle a startup or fuel growth. Most entrepreneurs are aware of venture capital and angel investors as target sources of funds – pop culture shows such as Shark Tank and Dragon’s Den, as well as press-earning “unicorn” valuations – have earned ‘Venture Capital’ a spot in layman’s language. Far less understood is the work of investment bankers – particularly those raising capital in the private market.

We intend to discuss the differences between raising funding from venture capital firms and raising funding via broker-dealers. We’ll start with some general definitions.

A Venture Capital firm is most often a Limited Partnership (LP), managed by a team of General Partners (GPs). General Partners first obtain committed capital from accredited investors or qualified purchasers–Limited Partners–and use these commitments to form a fund. Each fund usually has a defined lifespan and specific industry or geographical focus. Typically, General Partners have full investment decision-making discretion over their Limited Partner funds, the funds have a defined life (typically 10 years) and investments in portfolio companies are made during the “investment period”, which is usually the first two or three years of the fund’s life. VC fund returns are reliant upon the sale of the fund’s stake in portfolio companies to private equity firms, strategic acquirers, or occasionally via an Initial Public Offering (IPO).

The number of U.S. Venture Capital deals per annum (post the economic recession of 2008) increased from 4,458 in 2009 to a peak of 10,444 deals in 2014 before slipping to 8,637 deals in 2017.  But despite the decrease in the number of VC deals per year from 2014 through 2017, there has been a marked increase in the dollar size of individual deals. This growth, in terms of investment and capital deployment, came alongside a rise of disruptors: technology-enabled companies whose business models cut long-standing, high-profit industries off at the knees. Continue reading “The Cap Raise: Introduction”

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The State of Sustainable Business 2018

BSR and GlobeScan have released “The State of Sustainable Business 2018,” an interesting insight into the world of sustainable business and identified common perceptions and practices of corporate sustainability professionals.

In addition to measuring shifting priorities and challenges in corporate sustainability, this year’s survey presented a unique opportunity to understand how business is responding to the changing social landscape.

To hone in on actions of companies within the sustainable business community, this year’s data draws from the responses of one sustainability practitioner at each of 152 BSR member companies who participated.

The survey results can be viewed and downloaded here.

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“Your Stoke Won’t Save Us”: An Important Message For Businesses, Outdoor Enthusiasts, and Individual Change Makers Alike

This post was written by Dana Gulley ’17, founder and lead consultant of Third Peak Solutions. She can be reached at dana@thirdpeaksolutions.com.

You could say I was stoked when the postal carrier slid the May 14th edition of High Country News through my mail slot last month. The twice-monthly magazine covers conservation issues “for people who care about the West,” and over the last nine months, this New Yorker had become one of those people. Flipping through the pages, “Your stoke won’t save us: the idea that outdoor recreation leads to meaningful conservation rests on a very big ‘if,’” by Ethan Linck, jumped off the page at me.

Since moving to the little city of Bozeman, Montana last fall, my increased focus on rock climbing, mountain biking (photo, left), canoeing and backpacking has brought me closer to the outdoor recreation community, a community that is at the heart of this place and many others like it. That said, I’ve felt strangely further away from my conservation roots. I devoured the article, nodding, admittedly a bit self-righteously, through all 3,000 words. Yes, yes! This is what I have been saying. Outdoor recreation does not solely predict one’s environmental attitudes! While the outdoor recreation industry is willing to make increasingly political statements about protecting our wild places, they’re yet to show they are willing to pay for that protection! And my sustainable business training rushed back: we don’t need to settle for trade-offs! Businesses can do well by doing good.

The euphoria of seeing my opinion in ink was quickly replaced by guilt. Okay, so our environmental issues continue to mount and there’s opportunity being left on the table. What have I done about it? Those petitions I hawked as the outreach director for Riverkeeper, a clean water nonprofit in New York’s Hudson Valley, seemed like a distant memory, even though I spend more time in outdoor places than ever before in my life. And as a strategy consultant, I have found myself focusing on the more familiar world of non-profits as opposed to supporting and promoting sustainable businesses. As stoked as I was to read the article, I felt simultaneously counterfeit. With all the changes in my life, I had somehow lost my tribe: that community that is so essential to having the courage to face a big problem and do something about it. And I knew that tribe must exist here. After all, in 2015 the Montana state legislature was the 29th in the nation to pass a law that allows companies to legally register as benefit corporations.

Later that week, Business for Montana’s Outdoors, a coalition that includes some 180 businesses, hosted a panel discussion, “Tech and the Outdoors: How the ‘Montana Mystique’ is Fueling Business Growth.” In Montana, the tech industry provides 15,000 jobs and $1.03 billion in wages, and it’s growing fast. Panelists from several of Bozeman’s mature tech companies and start-ups focused on the competitive advantage Montana’s outdoors provides in everything from attracting and retaining talent to entertaining clients and customers. Panelists shared countless examples of how their companies were more successful because of Montana’s beautiful and enjoyable natural environment. What they didn’t share, were innovative ideas for how their businesses would ensure the ongoing protection of the outdoors, something they acknowledged was a critical asset.

The research shows that millennials are increasingly interested in being part of companies that they can feel proud of, companies that are actively doing something about the problems we face. And in the age of Patagonia replacing its product homepage with “The President Stole Your Land,” while mounting an aggressive lawsuit to fight the historic removal of public lands in Bear’s Ears National Monument, businesses have more permission than ever to act. Determined to push the envelope and proudly gripping the High Country News magazine, I stood up, and channeled the collective strength of my tribe, my Sustainable Innovation MBA cohort from the University of Vermont.  I hear how Montana’s outdoors helps you, but how will you help the outdoors?

While I was initially frustrated by the lackluster response (some non-profit donations here, a volunteer trail building day there), this experience reminded me of something I had lost sight of: if we are to overcome the momentum of the status quo that pushes businesses to think the same way they always have, then we must each harness our respective tribes and act now. Businesses need our help, as consumers and consultants, to innovate new models of corporate social responsibility that address the world’s problems while helping them thrive. We don’t have to start from scratch. As an outdoor recreator, I can be an ambassador for environmental advocacy in my community, limit my consumption by purchasing used gear or new gear from unparalleled companies like Patagonia, and support organizations like Protect our Winters (POW), a climate advocacy group that organizes outdoor enthusiasts to take action. As a consultant, I can build on the momentum of the 2015 law here in Montana to pursue for-profit clients and develop and share sustainable business best practices.

In case it inspires you to act, too, consider this my call for tribe-members and to recommitting myself to contribute to solutions instead of nodding along vigorously at the problems. And while these actions alone won’t save us, I’m stoked to do my part.