New video - Wisconsin Innovation Kitchen and our emerging network

Congratulations Tom, Annette, the Hodan Center, all my friends at the kitchen, Iowa County Area Economic Development, and everyone involved in our wonderful Wisconsin Innovation Kitchen project!

Wisconsin Innovation Kitchen

Hodan Center

Iowa County Area Economic Development Come Grow With Us!

My Kiva portfolio, May 2011. "A hand up to entrepreneurs"

I really enjoy working with Kiva. They have created an amazing business model that connects people and opportunities worldwide through lending.

This crowdfunding model is moving toward approval in the United States as a new mechanism for funding small businesses.

Here's what Kiva says in their responses to new loans:

"We're so excited that you've chosen to give a hand up to entrepreneurs working towards better lives."

Check out these current Kiva stats:

$1,216,125 loaned this week

3,090 entrepreneurs funded this week

15 seconds between loans

18,515 loans this week

$220 million in loans since 2005

98.75% repayment rate


When this kind of crowdsourcing model can be directed toward new business startups and expansions in the U.S., job creation will flourish.

Kiva lets me be a micro volunteer - in short time slots that allow me to make a little bit of difference in circumstances and places that are important to me.

The current repayment rate for loans I've made to Kiva entrepreneurs is 100%

What a cool org. Thank you Kiva for the wonderful entrepreneurship opportunities you help fund, and the dreams you inspire worldwide!


My lender page at KIVA

Kiva

Happy 17th anniversary Forward Community Investments!

Everyone in Wisconsin should be thankful for the work of Forward Community Investments.

A wonderful group of friends from across the state helped FCI celebrate their 17th anniversary today. Here is how this valuable and productive organization describes itself:

"Forward Community Investments works with nonprofits in Wisconsin to help them make strategic financial decisions and build their capacity for greater success today and tomorrow. In 2010, our loans totaled more than $4 million and we provided strategic advice to various nonprofits throughout the state. And, in 2011, we have money to lend and assistance to offer.

For 15+ years, FCI has been bringing together nonprofits, socially-minded investors and funders to make amazing things happen in communities throughout Wisconsin. During that time, we have lent close to $23 million to nonprofits for the development of affordable housing and community facilities and services and the promotion of economic development initiatives. Our lending has cut across urban and rural demographics alike. We invite you to discover how to become part of what we do – whether it’s by borrowing, investing or giving."

As a 35+ year for-profit entrepreneur I now am immersed in, and relishing social entrepreneurship. In the new world of social entrepreneurship you still have to make a profit but you get to define that profit in better, broader, smarter terms.

In my new work, it's my great honor and privilege to have become friends with Salli Martyniak, President of FCI. Salli has been a patient mentor, emergency relief valve, wise devil's advocate, and much more.

My hearty congrats to the entire FCI team on your 17th anniversary!

Forward!


Forward Community Investments. Image copyright FCI.

Meet the FCI team

Employment directly related to the Wisconsin Innovation Kitchen

Our Innovation Kitchen is a wonderful startup. Every day the story gets better and new opportunities emerge.

I gathered this data for my friend Karen at Fresh Taste in Chicago who helped put the summary into the linked doc below.

The entire team at the Hodan Center, especially Tom and Annette, should stand tall for this accomplishment. In a stormy global sea of economic difficulties, this is high ground.

Employment directly related to the Wisconsin Innovation Kitchen

Full time professional food staff : 6
Client-employees (developmentally disabled) : 32
Professional HR staff to support client-employees : 3
Employees of business entities currently processing through the kitchen : 30
Farmers supplying produce : 15
Employees of support businesses for kitchen entrepreneurs : 5
Sales people serving the kitchen's purchasing needs (food wholesalers, etc) : 6

Employment Total : 97

In addition:

• Approximately 700 separate businesses purchase food produced at the kitchen wholesale for resale to their customers

• The kitchen does 1-2 catering jobs per week, contributing indirectly to additional purchasing and employment in the region


Download Wisconsin Innovation Kitchen employment summary

Wisconsin Innovation Kitchen

Hodan Center, Mineral Point, Wisconsin

Iowa County Area Economic Development Come grow with us

Fresh Taste, thanks Karen!

Local Processing and Commercial Kitchens. Ankeny, Iowa. June 27

I'm looking forward to a presentation I'll be sharing with the Iowa League of Resource Conservation and Development (RC&Ds) in Ankeny on June 27.

My talk will be on "Local Processing and Commercial Kitchens."

Specifically I want to discuss our proposals for creating a network of community based food processing facilities. This network will create jobs, help new and existing small businesses, and create economic development models that can be replicated globally.

Here is a nice overview about the Iowa RC&Ds from their site:

“Enhancing lives through conservation and community services”

"Resource Conservation and Development (RC&D) is a unique program that helps people protect and develop their economic, natural, and social resources in was that improve their area’s economy, environment, and quality of life. Local RC&D Councils provide ways for people to plan and implement projects that will make their communities better places to live."

"RC&D is based on the idea that local people know what their communities need and can create solutions that will really work. Groups of local volunteers establish RC&D Councils, which represent sponsoring organizations within multi-county region. Council Directors volunteer their time to address important issues in their communities, and to build a better life for themselves and others. The strength of the RC&D Program is in local people working together to solve their own problems. The development of local leadership and community pride is a key part of RC&D projects and successes."

Thanks for the invitation! I am looking forward to visiting old friends and making new ones in Ankeny on June 27.


Iowa League of Resource Conservation and Development offices (RC&Ds).

"Sustainability is about doing more: more innovation, more good ideas."

We subscribe to Ode Magazine, a publication "for intelligent optimists."

Challenging ideas. Typically contrary to dogma in ways that end up being right.

As a person working in economic development and a lifelong entrepreneur, I agree enthusiastically with the positions Editor Jurriaan Kamp and his writing team have taken in the new issue.

Ode Magazine June 2011

"More is better. Sustainability used to be about doing less. Why the new sustainability is about doing more: more innovation, more good ideas."

- From Mr. Kamp's Letter from the Editor, "The more we share, the more we have":

"There are still many solutions to be found from many problems, old and new. We have yet to implement an economic model that sustains all 6 billion of us in a fair and just manner. Our world has to become clean and sustainable. These are big challenges. In order to overcome those challenges, we can offer nothing better than our creativity, the very same creativity that drove the innovation that has given us all the amazing breakthroughs of the past two centuries."

- From Mr Kamp's essay:

The new sustainability. Why we need more economic growth, not less, to create a truly viable future. (emphasis added)

"The quest for sustainability is the modern variant of the Industrial Revolution, and it offers entire generations the opportunity to do meaningful work and redesign societies. We must take full advantage of that opportunity. But we can only do that if we let go of our defensive, conservative vision of sustainability and adopt a vision in which two aspects are central: people and economic growth."

Ode Magazine June 2011.

Value chain best practices

Here's some great entrepreneurship guidelines for creating valuable commercial partnerships. We worked hard to build these kinds of relationships in our businesses.

My friend Joe from our Great Lakes Hubba Hubba food group sent a link to a really good doc I put to use right away.

The title is 'Value Chain Best Practices: Building Knowledge for Value Chains that Contribute to the Health of Source Communities'.

The subject of the paper is building effective 'value chains'. This is a term or art that improves on the old idea of exploiting and extracting profit from your suppliers, those in your 'supply chain'. The value chain approach is to make all links in the chain increasingly sustainable and valuable to all the other links.

I'm utilizing this model to help the Wisconsin Innovation Kitchen become valuable commercial partner to new and emerging food businesses.

I doctored their graphic (above) for this post to highlight one specific stage: PILOT, at supply chain scale.

This is exactly where the Innovation Kitchen fits into the emerging commerce of local food and regional food systems. It can pilot and produce local food processing at supply chain scale.

The data from our market based, real-time experiments in regional food processing will make this, and many emerging models of all kinds increasingly replicable.

This capacity - this link - is helping build value chain partnerships right now. Today.

I print this out and take it with me on sales calls:

From 'Value Chain Best Practices':

Structural Innovations
Changes in infrastructure that enable healthy value chains:

Structure

• Contracts to increase knowledge and stability of prices

• Minimum price arrangements to provide predictability of pricing; premiums for established practices (sourcing from small scale producers, environmentally sustainable practices, quality of production, etc); and rapid payments on delivery terms

• Preferential sourcing arrangements based on criteria (quality, scale, environmental practices, certification, etc).

• Information and knowledge management mechanisms that support regular two-way communication and innovation.

• Risk Sharing Fund

Organizational Structure

• Sustainability Manager embedded in buyer group

• Specialized intermediaries to aggregate production and ensure
traceability and quality

• Alignment of incentives within organizations so that the goals of the
value chain are symbiotic with the goals of the engaged organizations

• Working with clusters/associations of smaller scale producers, including the facilitation of effective production associations and investing in their
long term business management capacity.

Market Structure

• Harmonize standards and certification schemes

• Fair implementation of standards to ensure that the cost of certification doesn’t unfairly reduce access for smallholders and that producers participate in the development and implementation of standards.

• Equity arrangements including shared ownership business structures and price sharing arrangements

• Make contributions visible through chain



Practices to avoid in a value chain:

• Threats of “delisting” approved suppliers if prices are too high

• Suppliers required paying for promotions or openings.

• Suppliers have to pay back a percentage of annual sales

• Minus margins (can’t supply at a higher price than to competitors)

• Delayed payment for produce already delivered

• Lowering prices at the last minute to suppliers who have few alternative outlets

• Last minute changing of quantities

• Changing standards with no support or time to change the production system

• Arbitrary removal of farmers from the supplier lists

• Using contracts that cannot be enforced by the suppliers

• Institutionalization of results: how can the learning from a value chain project ripple out from the specific chain to impact the core strategies of a large company and ultimately the whole industry?

• Are there public policies that get in the way of the chain, or if changed may help it grow?


Good directions for the many regional food systems now emerging. I look forward to helping this story grow.


Download this summary from the larger Value Chain Best Practices report.

Value Chain Best Practices: Building Knowledge for Value Chains that Contribute to the Health of Source Communities. Full article.

Thanks to my friend Joe at HollyMead Capital for this valuable and timely addition to the conversation.

Graphic borrowed and enhanced without permission from the final report. Thanks!

Dilbert's Scott Adams on teaching entrepreneurship

From a Weekend Wall Street Journal essay by Scott Adams, April 9, 2011

"How to Get a Real Education.

Forget art history and calculus. Most students need to learn how to run a business, says Scott Adams."

"I understand why the top students in America study physics, chemistry, calculus and classic literature. The kids in this brainy group are the future professors, scientists, thinkers and engineers who will propel civilization forward. But why do we make B students sit through these same classes? That's like trying to train your cat to do your taxes — a waste of time and money. Wouldn't it make more sense to teach B students something useful, like entrepreneurship?"

How to Get a Real Education. By Scott Adams, Weekend WSJ 4/9/11

Image borrowed from the WSJ and Scott Adams. Thanks both.

What if more people could buy into startups easily and inexpensively?

One of the key hurdles for any kind of startup or growing business is access to capital. The web is proving out many new ways to make small loans available (I'm a Kiva member) but there is no legal way to use these same tools to sell equity ownership in an organization.

Startups and small businesses can not solicit investments directly from most people without going through a costly Securities and Exchange Commission (SEC) registration.

When my friend and recent business partner Dave and I started our manufacturing business we initially invested our own money and then small amounts from friends.

When our business started winning awards and growing quickly, we needed to raise outside money from a larger circle. Because we could not afford the SEC registration, we were limited to soliciting investments only from accredited investors, which is a legally defined term roughly meaning 'wealthy enough'.

We could not offer a chance to invest in our growing business through a general offering to peers in our industry, to our enthusiastic customers or to the significant audience of individuals who were looking to support green manufacturing and sustainable jobs.

Offering a wide range of people a chance to invest small amounts of money with innovative new businesses would launch millions of new enterprises. Importantly it would grow a valuable new culture of entrepreneurship and ownership throughout our society.

What if we could utilize social media and crowdsourcing to quickly and inexpensively assemble small, enabling funding streams to launch and grow new businesses and new jobs?

I think our country needs to experiment with this starting yesterday. But we can't do it because of current SEC rules which are now about 80 years old.

This may be changing.

Bloomberg BusinessWeek just published an excellent article by Professor Scott Shane, award winning author and entrepreneurship researcher at Case Western University.

My takeaway is the high value in making a change in SEC regulations that will allow small investments ($100 max) with a maximum investment to the enterprise of $100,000. This is a game changer:

Let the Crowd Buy Equity in Private Companies
Bloomberg BusinessWeek. May 3, 2011. By Scott Shane.

"The SEC should change its rules to permit entrepreneurs to use crowdfunding to sell equity. The risk would be no greater to investors than that posed by accepted online lending models."

"Every year venture capitalists and accredited business angels invest in only about 15,000 of the 27.5 million businesses in operation in the U.S., according to my analysis. Many new businesses being started in the U.S. every year could use small amounts of external equity. Analysis by sociologist Paul Reynolds in the Entrepreneurship in the United States Assessment, a survey of American adults undertaken in 2004, shows that a typical new business has only about $15,000 in initial funding, of which $6,000 comes from the entrepreneur."

Why Not Exempt $100 Contributions?

"Allowing entrepreneurs to raise equity online will impose no more risk on funders than they currently face lending money to entrepreneurs online. Last year the Sustainable Economies Law Center asked the SEC to exempt equity crowdfunding efforts of $100,000 or less, with no more than $100 to come from any individual. Allowing investors to purchase such tiny amounts of equity in other people's companies doesn't seem to impose a significant risk of financial loss on individuals."

I'm very impressed by the logic of this argument and I'm excited about the possibilities for entrepreneurship, new businesses and new jobs this effort represents.


Bloomberg Business Week article, 'Let the Crowd Buy Equity in Private Companies'

Professor Scott Shane, Professor of Entrepreneurial Studies at Case Western Reserve University. Author of 'Illusions of Entrepreneurship: The Costly Myths That Entrepreneurs, Investors, and Policy Makers Live by.' 2009 winner of the Global Award for Entrepreneurship Research.

Blog post. Case Western Graduate School of Business. Business as an Agent of World Benefit. About our work at the Wisconsin Innovation Kitchen.

"What's important is getting the whole community more entrepreneurial." MIT program for entrepreneurship.

Kiva.org Online lending for global entrepreneurs.

IRS LLC page

Hubba Hubbas. The musical.

We've been calling our emerging hub of food hubs in the Great Lakes region the Hubba Hubbas, of course.

Our Hubba group met last week in Chicago. My friend Karen with Fresh Taste has lit the light of this organization and nurtured it. Much good is already underway.

As a professional skeptic, I am startled by my flat out enthusiasm for working with this group, now organizing around the name 'Great Lakes Food Hub Network'

That said, the Hubba Hubbas are now starting to dance. I love this part of enterprise formation. From silence to melody. Something from nothing stuff.

One signature accomplishment of the gathering was our first statement of principles and practices. Best first line of any doc I've signed on to ... 'Assume good will.'


Great Lakes Food Hub Network
Principles and Practices
May 6, 2011

“Assume Good Will”

The Great Lakes Food Hub Network (Hubba Hubba) is a group of food hub practitioners dedicated to collaboratively integrating the values and practices of reciprocity with those of the marketplace. In doing so, we are creating a commons of resources and experience focused on community wealth creation, to which all contribute and from which all may benefit. Community wealth creation requires the implementation of business models that build multiple forms of capital: intellectual, social, financial, individual, political, natural and built.

This implies:

• Basing our dealings with each other on an ethic of sharing as well as individual self-interest
• Conducting ourselves as a learning community, which implies sharing what we learn as we develop new business practices, and organizing ourselves as a group capable of consulting to one another.
• Envisioning our work from the outset as a set of linked initiatives, not solely as individual enterprises

Over time, we commit ourselves to develop methods and technologies that facilitate reciprocity, learning, and the building of multiple forms of capital. These may include:

• Commitment to local sourcing
• Open source IT platforms
• Revolving loan funds
• Shared branding
• Learning journeys and exchanges
• Co-investment
• Business models that involve farmers, workers and communities as co-owners and partners
• Means to connect to similar networks in other regions of the country

We are intentional about expanding the network and will invite others to participate who share the values and commitments described above and who bring skills and resources that will strengthen the network. Our goal is to build a strong Great Lakes network reaching from Minneapolis-St Paul Minnesota to Rochester New York, with the assumption that we will develop relationships with similar networks in other regions of the country. We intend that the work we do will serve and inspire other networks.


+++

Many thanks to my friend Karen and Fresh Taste for helping seed and nurture our emerging Great Lakes Food Hub Network.

Original hubba hubba post with links to Great Lakes food hub friends.

Underlying hub graphic thanks to atributosurbanos, a project from the Andalusia Center for Contemporary Art