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.

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?

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”

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”

Family Matters

This post was written by Jeffrey Lue ’19.

EDITOR’S NOTE: For an enhanced experience with this post, please take a listen to this 1990’s throwback.

The Sustainable Innovation MBA Advisory Board member Don Droppo, CEO of Curtis Packaging (and UVM ’96) accepted the U.S.-based Multi-Generational Family Enterprise Award.

It’s a rare condition, this day and age, to find emphasis being placed on the importance of family businesses. But at the Family Business Awards in early October, the Grossman School of Business and supporting community has the opportunity to acknowledge family businesses who are leaders in their respective industries. This year, we celebrated Lake Champlain Chocolates, Curtis Packaging, and Foster Brothers Farm / Vermont Natural Ag Products Inc. for their innovation and commitment to sustainability.

Hearing the stories of the three 2018 winners and their 2017 counterparts were a beautiful example of love and tradition of the grand design. Since 1983, Lake Champlain Chocolates has been aspired to providing extraordinary chocolate moments. In addition to creating wonderful chocolates, LCC has demonstrated their commitment to sustainable business practices with their certifications (B Corps, Fair Trade) and community service.

It’s impressive enough to find a business in operation since 1845, but some people say it’s even harder to find one with the vision to incorporate environmental stewardship into its core competencies after all those years. Curtis Packaging achieved both accolades, becoming the first packaging company in North America to use 100% renewable energy, be carbon neutral, and a zero-waste-to-landfill facility.

The Lampman family of Lake Champlain Chocolates.

What’s the secret to the success of these small businesses? Well there must be some magic clue inside these gentle walls in the new dairy barn at Foster Brothers Farm. This fifth-generation farm has innovation engrained in their DNA. They built one of the first of New England’s methane digesters back in the early ’80s, expanded their portfolio to include an organic line of compost (MOO), and recently implemented a heat recovery system designed to capture and repurpose the heat created during the aerobic composting process.

These families are an inspiration of how business should be done. At today’s ceremony, there was real love burstin’ out of every seam of Ifshin Hall, and it was clear to see that it’s the bigger love of the family that will keep these businesses going strong. Congratulations again to all the 2018 winners!

Sustainable Innovation in Review

 An occasional curation of sustainable innovation and business transformation news, postings, et cetera…

Greener companies outperforming their peers?

Companies sourcing renewable electricity outperform their rivals financially, according to a new report released Tuesday from RE100, the initiative from the Climate Group that encourages firms to commit to using 100 percent renewable power.

Virgin Atlantic flies the first ever commercial flight using sustainable jet fuel

Over at the Virgin blog, Richard Branson informs us that Virgin Atlantic has completed the first ever commercial flight using LanzaTech’s innovative new sustainable aviation fuel.

Appalachian Ohio could get a giant solar farm, if regulators approve

Appalachian Ohio, a region hurt by the decline of coal, may become home to one of the largest solar projects east of the Rockies.

How tech is turbocharging corporate sustainability

At the recent Global Climate Action Summit (GCAS) in San Francisco, 21 companies, including Bloomberg, Cisco, Hewlett Packard, Lyft and Salesforce, announced the launch of the “Step Up Declaration,” a new alliance dedicated to harnessing the power of emerging technologies to help reduce greenhouse gas emissions across all economic sectors.

“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.

 

Using Design Thinking to Build A Better World

This post was written by Ian Dechow ’18 and Randy Baron ’18

Entering Kalkin 110 on a particular mid-April day was unlike any day before it; a lively if not curious environment awaited inside the classroom.

Against the auditorium style seating a table was set up and laid out with what could be confused as the tools from Dexter’s laboratory, a motley assortment of pliers, saws, metal files, and safety goggles were spread over a black tarp. On a second look around the room you notice a type of pinball style launching devices affixed to the front desk, a ping pong ball loaded into its cartridge, aimed at narrow vertical strip of peg board. On the ground in front of the desk beyond the pegboard barrier were two lines of tape outlining what we would come to learn was a landing strip of sorts. We were not sure what to think of this odd display as we took our seats, but were quickly informed by the excited and jovial explanation from Mike Rosen, our guest lecturer for the day.

Mike, an engineer and Research Associate Professor at University of Vermont, had come to the Grossman School of Business to teach a workshop on Design Thinking for The Sustainable Innovation MBA 2018 cohort. Mike, after telling us a little about his background, passed out an eclectic set of supplies to the pre-divided teams and told use what the challenge for the class would be. Using the launcher at the front of the room, the tools, and materials provided: pegboard, small metal sheets, PVC piping, ping-pong paddles, and various other connector type elements, we were to construct a device to divert a ping-pong ball around, over, or through the vertical pegboard barrier and land within the landing strip on the ground designated by red tape. Each team after understanding the challenge would get opportunity to ideate, prototype and test a device in order to achieve the unconventional task.

Continue reading “Using Design Thinking to Build A Better World”

Practicum Scope Pitch Day!

The Sustainable Innovation MBA Class of 2018 is entering the home stretch.

On May 11, the cohort, faculty, and sponsoring companies gathered on UVM’s campus for what has become an inspiring demonstration of how the students have “put it all together.” Students spent the day “pitching” the scope and framework of their practicum projects — a capstone of The Sustainable Innovation MBA experience. Practicums call upon all the skills, insights, experiences, and learning the students have acquired over the past nine months.

The three-month practicum project is a full-time, hands-on experiential engagement with either existing companies or new ventures from the US and around the world focused on real challenges and opportunities in sustainable entrepreneurship. Practicum projects are composed of teams of 2-3 Sustainable Innovation MBA students each. Projects run from May until August, and culminate in a final report and presentation right before graduation.

Students pitched scoping for projects at companies such as Keurig Green Mountain, Griffith Foods, Essilor, Seventh Generation, and Caterpillar.

The deliverable for the practicum is a detailed and comprehensive business/action plan for the host organization.