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Barefoot Billionaires. November 2006. Page 2 of 15. 1. INTRODUCTION. The world desperately needs more outstanding entrepreneurs—and top-notch social e...
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Barefoot Billionaires The big investors behind the social entrepreneurship boom

Skoll Paper 2 November 2006

John Elkington, Founder & Chief Entrepreneur, SustainAbility Pamela Hartigan, Managing Director, The Schwab Foundation for Social Entrepreneurship Comments? [email protected]

SPONSORED BY THE SKOLL FOUNDATION

Barefoot Billionaires

November 2006

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Contents 1. Introduction ........................................................................................................................ 2 2. Bill Drayton......................................................................................................................... 4 3. George Soros..................................................................................................................... 6 4. Stephan Schmidheiny ........................................................................................................ 7 4. Bill and Melinda Gates ....................................................................................................... 9 5. Klaus and Hilde Schwab .................................................................................................. 10 6. Jeff Skoll .......................................................................................................................... 12

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1. INTRODUCTION The world desperately needs more outstanding entrepreneurs—and top-notch social entrepreneurs in particular. But how would you set about tracking them down? What signs would you look for? Where would you begin your expedition? How would you stalk and engage any entrepreneurs you did find? How would you know which ones were truly exceptional? And how would you help the best of them do more of what they do? Happily, these are questions that have already been answered by a small group of people you could pretty much count on the fingers of your own hands. What follows are the brief stories of four extraordinary men and two outstanding husband and wife teams. These social capitalists have led the quest, aiming to find, investigate, celebrate and support highpotential barefoot entrepreneurs. True, on his current course Bill Drayton of Ashoka (see page 4) is never going to be a millionaire, let alone a billionaire, but he was perhaps the first to “go barefoot” in our sense of the word (panel 1). We will take the stories more or less in the order in which the main characters joined in the quest. Panel 1

barefoot (bâr'fʊt') adj. 1. Characterized by a willingness to step boldly into the future, to investigate on-theground realities, and co-evolve scalable, entrepreneurial solutions to economic, social and environmental challenges. 2. Predominantly focused on addressing the needs of the world’s four billion poorest people. 3. Operating well outside the comfort zone of current capitalism. 4. Alternative to “social” in social entrepreneur, social capitalist. 5. Derivation: During China’s Cultural Revolution so-called “barefoot doctors” reached parts of rural China that urban-trained doctors refused to serve. The barefoot system was abolished in 1981, but inspired international interest in participative medicine, primary health care and preventative approaches. 1 . So what kinds of people are we dealing with here? If social entrepreneurship is the talent sought and leading social entrepreneurs are potentially the stars of the show, then these investors are part of a pioneering and growing group of talent hunters and so-called “superphilanthropists.” Among the earliest of the current wave of barefoot entrepreneurs, 2006 Nobel Peace Prize winner, Muhammad Yunus got involved in the world of social enterprise in 1976. Interestingly, when we did a rough-cut analysis of the timing of the entry of each of the Schwab Foundation “outstanding social entrepreneurs”, there was a clear pattern, covering five decades. Just 3 percent had started out in the 1960s, and those towards the end of that extraordinary decade. By contrast, 15 percent got involved in the 1970s and 28 percent— almost twice as many—in the 1980s. The biggest jump of all, however, came in the 1990s, which accounted for no less than 47 percent of the Schwab Foundation entrepreneurs. Very few, just 7 percent, had started out in the early years of the 21st century, though that is hardly surprising, given how long it generally takes for successful social entrepreneurs to gain real traction.

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The first of our small handful of our social capitalists got involved in 1980, at the beginning of a decade that saw another significant ramping up in the level of social enterprise. This was American Bill Drayton, who founded Ashoka. He more than anyone else has helped kickstart the work of social entrepreneurs hailing from all the major world regions than anyone else. Since its founding, Ashoka has provided more than 1700 social entrepreneurs, elected as Ashoka Fellows, with start-up financing, professional support services and connection to a global peer network. For Ashoka, “the job of a social entrepreneur is to recognize when a part of society is stuck and to provide new ways to get it unstuck.” Next, comes George Soros. Born in Budapest, Hungary in 1930, Soros survived the Nazi occupation and left communist Hungary in 1947 for England. While a student at the London School of Economics, he became familiar with the work of the philosopher Karl Popper, who had a profound influence on his thinking and, subsequently, on his professional and philanthropic activities 2 . Later, in 1956, he moved to the United States, where he began to build up a large fortune through an international investment fund he founded. He has been active as a philanthropist since 1979, when he began providing funds to help black students attend the University of Cape Town in apartheid-plagued South Africa. Today, however, he is best known in philanthropy circles as Chairman of the Open Society Institute (OSI), launched in 1993, and as founder of a network of philanthropic organizations that are active in more than 50 countries. Around the same time, in 1994, billionaire Swiss entrepreneur and industrialist Stephan Schmidheiny, founded AVINA 3 . His favorite hunting ground: Latin America. Having worked for decades with big companies, Schmidheiny became increasingly interested in entrepreneurial solutions to the world’s great problems. “For me,” he says, “a good entrepreneur is someone who consistently develops [his/her] business with a clear vision and an equally clear mission, works very hard, and has a special ability to efficiently administer the capital, the resources and the technology available. An entrepreneur is someone capable of persuading others to adopt [his/her] own vision, of motivating them to achieve [his/her] goals. However, the entrepreneur I now imagine would not have to build huge companies but rather bring about positive change that would afford as many people as possible the opportunity to lead decent, dignified and productive lives and to change the regional economic situation.” 4 In a moment of serendipity, Schmidheiny stumbled on Bill Drayton and Ashoka when reading a magazine during a transatlantic flight. And, like the energetic entrepreneur he is, he soon had a partnership with Ashoka, using his capital to help fund their programs, particularly in Latin America. Schmidheiny recalls: “The success of Ashoka’s entrepreneurs proved to me that heads of government and captains of industry—those who should actually be responsible for improving their societies—seldom bring about significant changes. The secret lies in searching for individuals with leadership abilities, not only among the so-called elites, but in all sectors of society.” Neck-and-neck with Schmidheiny were Microsoft co-founder Bill Gates and his wife Melinda. In 1994, after years of contributing to charitable causes, Bill and Melinda Gates consolidated their giving to address two main initiatives: global health and community needs in the Pacific Northwest. Bill’s father, William H. Gates Sr., agreed to manage the new William H. Gates Foundation, formed in December 1994 with an initial stock gift of about $94 million. At that point, interestingly, the Foundation moved from a basement in Gates, Sr.’s house to a new dedicated facility in Seattle. And, in 1999, the Gateses jumped their foundation into the super-league by raising its endowments to over $16 billion 5 . By August

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2006, that figure had skyrocketed to $31.9 billion, including a massive infusion from Warren Buffet. Next, and four years after AVINA first opened its doors, the Schwab Foundation for Social Entrepreneurship was launched by Klaus and Hilde Schwab 6 . Few people are better connected with the heads of government and captains of industry. For more than 35 years the Schwabs have been the architects of the World Economic Forum and its annual Davos summit of global “movers and shakers”. From 1998, the Schwabs took their first steps to join in the quest for high potential social entrepreneurs by establishing their Schwab Foundation. Since 2000, the Schwab Foundation has worked to identify, select and showcase the world’s most accomplished social entrepreneurs. From its inception, the Foundation decided not to give grants to, or invest financially in, the social entrepreneurs it selects. This was a deliberate strategy, crafted as a result of the direct input of the first social entrepreneurs identified by the Foundation who convincingly argued that the best use of the Foundation’s resources would be to give them what no other Foundation could: access to the power, influence and resources represented by the members of the World Economic Forum, the sister organization of the Schwab Foundation. In addition, social entrepreneurs asked to be provided with an on-going opportunity to network and build linkages with one another, so as to learn from, complement and strengthen each other’s ground breaking work. Finally, at least as far as this sample goes, American Jeff Skoll—the first president of eBay—set up his own foundation in 1999 7 . He also established the Skoll Center for Social Entrepreneurship at Oxford University, a partnership between the Skoll Foundation and the Said Business School. To date, Skoll is the only one of the barefoot billionaires to have set up his own Hollywood studio to make films about the heroes and heroines of social enterprise. In the US, the PBS series The New Heroes screened in 2005, spotlighting fourteen social entrepreneurs 8 . Jeff Skoll is confident not only that people will pay to see great films on these critical issues, but also that many of them will want to get involved in tackling the issues when they leave the cinema or turn off their DVD players.

2. BILL DRAYTON The collector with most non-profit social entrepreneurs. Some people collect, study and work to conserve butterflies, birds and vintage cars. Bill Drayton, by contrast, collects, studies and supports social entrepreneurs. Like Clark Kent, you would hardly guess that Drayton was some kind of superman. At first glance, he is quiet, mild-mannered, studious even. Visit him in his twentieth storey nest overlooking the heart of Washington, D.C., and you also look down on the hulking shape of the Pentagon complex. In 2001, Ashoka staff watched in horror as American Airlines flight 77 crashed into the Pentagon, the very heart of the U.S. defense system, killing 184 people. Still, Drayton and his team have a very different view from the Department of Defense of what it will take to ensure real security in the twenty-first century. Drayton attributes much of what he is and has become to his genes and to his early environment. He sees strong links between his own character and the extraordinary characters of his parents. His father was an American explorer, who among other things did archaeology in the Sahara and dug for gold in British Columbia, while his mother was Australian, a gifted cellist who traveled alone to New York during the Depression to pursue her career in music. Born in New York in 1943, Drayton showed his entrepreneurial nature

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early. In fourth grade, he launched a class newspaper, The Sentinel, which eventually grew into a 32-page monthly magazine. But his thinking and passions were formed in the crucible of the Sixties, an era of civil rights, environmental protection and radical, counter-cultural alternatives. At age fourteen, he joined a leading civil rights organization, the National Association for the Advancement of Colored People (NAACP), organizing a boycott of a nearby Woolworth’s store to protest its discriminatory practices. Hugely influenced by Martin Luther King, Jr., he had earlier been profoundly impressed by Gandhi and his leadership of the Indian independence movement. “What most fascinated Drayton about Gandhi,” notes David Bornstein in his book How to Change the World, 9 “were his how-to’s: How did Gandhi craft his strategy? How did he build his institutions? How did he market his ideas? Drayton discovered that Gandhi, despite his other-worldly appearance, was fully engaged in the details of politics, administration, and implementation.” As his interest in India grew, Drayton became deeply interested in the life and thinking of the emperor Ashoka, who ruled from 269 to 232 BCE. Rather like Saul, the tormentor of early Christians who experienced a conversion on the road to Damascus, Ashoka, who had been building his empire through a series of wars, had some sort of epiphany, a conversion experience. He emerged from it overwhelmed with remorse. Renouncing armed conquest, he embraced non-violence, the ethical treatment of servants and animals, and a number of other ideas that were strikingly Gandhian in spirit—and utterly revolutionary at the time. Drayton, after spending some time in India in the company of Vinoba Bhave, the social reformer known as the “walking saint,” returned to the States and eventually made his way through Harvard, Oxford and Yale universities. While at McKinsey, the consulting firm, he soon displayed his creative genius—coming up with the so-called “bubble concept,” a method for radically cutting the cost of cleaning up pollution from industrial plants. Later, when the Reagan administration was threatening to eviscerate the Environmental Protection Agency, where he had once worked, Drayton launched the “Save EPA” campaign, playing a key role in thwarting the most radical plans to hamstring the Agency. Small surprise, then, that Drayton’s own political philosophy centers on the power of committed individuals. Like management guru Peter Drucker, who argued that every major change tended to be driven by a “monomaniac with a vision,” Drayton grew increasingly interested in social entrepreneurs, people with the ability to catalyze change. “Let’s find these people,” he encouraged his colleagues. “We should be investing in them now—when they are shaky and lonely, and a little help means the world.” 10 Drayton likes to put the social enterprise boom in historical context. From the time of the Roman Empire to 1700, he says, “there was almost no increase in average per capita income in the West. However, income grew 20 percent in the 1700s, 200 percent in the 1800s, and 740 percent in the last century.” 11 So what happened around 1700 that triggered these trends? “Business became entrepreneurial and competitive,” is his answer. “This was a profound structural change, a change that became irreversible as it compounded economic growth.” But there was a catch to all of this. The problem, he concludes, was that “the social half of society’s operations did not go through the transformation. It was too easy to tax the new wealth being generated by business to build the canals and roads, to provide education and other services, and then to build society’s safety nets. Moreover, since the money flowed through government and, like all monopolies, governments instinctively feared competition, the paymaster discouraged it.” The net result was “the squalor of the social sector that built

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up over these centuries. The failure to adopt a competitive architecture left social organizations sclerotic, service quality poor, costs high, salaries low, and repute lower still.” By contrast, Drayton continues, “The last two and half decades have seen an historic, profound, and extraordinarily fast turnabout. Across most of the world, the logjam suddenly broke. Social entrepreneurship has multiplied, competition has arrived, and the citizen half of society is racing to catch up with business. This rapid catch-up process is probably halving the productivity gap every 10-12 years.” Interestingly, too, “The average size, skill level, and competitive sharpness of citizen organizations have also increased. They are, moreover, becoming far more than the sum of their parts. We are seeing the emergence of the same sort of open, competitive-yet-collaborative relationships that marked the birth of the modern competitive business sector three centuries ago.” Social entrepreneurs, Drayton argues, represent “a powerfully contagious paradigm,” just as we see in scientific revolutions. Like scientific pioneers, they introduce primary pattern changes, each of which “triggers cascades of follow-on innovations, adaptations and local applications.” Drayton makes no secret of the fact that Ashoka’s ultimate goal is to make “everyone a changemaker.” But how to spot those first movers, the people who really break up the logjams? Bill Drayton and Ashoka look for five things: a big, pattern setting “New Idea”; creativity in both goal-setting and problem-solving; entrepreneurial quality; social impact of the New Idea; and, this is vital, entrepreneurs with ethical fiber.

3. GEORGE SOROS The man who “broke the Bank of England” is our first true barefoot billionaire. To a greater or lesser degree, most social entrepreneurs try to change the system they work within. But few people have done so much in recent decades to promote system change as George Soros. On “Black Wednesday”, September 16, 1992, Soros became famous more or less overnight when he speculated against the Bank of England, selling short more than $10 billion worth of pounds Sterling 12 . When the Bank of England was forced to pull the currency out of the European Exchange Rate Mechanism and to devalue the pound, Soros earned over $1 billion. Despite working as an investor and currency speculator (in 2004, his fortune was estimated at $7 billion), he argues that the current system of financial speculation undermines healthy economic development in many underdeveloped countries. Soros blames many of the world's problems on failures inherent in market fundamentalism, and his opposition to many aspects of globalization has made him a controversial figure. Interestingly, he appears to have no problem working to further his own self-interest economically, while at the same time lobbying for a drastic overhaul of the global financial system 13 . In 1994, he founded one of the world’s most interesting social enterprises, the Open Society Institute (OSI)—and has also set up a number of linked foundations. Based mainly in Central and Eastern Europe and the former Soviet Union—but also in Africa, Latin America, Asia and the United States—these foundations are dedicated to building and maintaining the infrastructure and institutions of an open society. They work closely with OSI to develop and implement a range of programs focusing on civil society, education, media, public health and human rights as well as social, legal and economic reform. As an indication of scale, in recent years, OSI and the Soros foundations network

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have spent more than $400 million annually to support projects in these and other focus areas. Significantly, the OSI aims to shape public policy to promote democratic governance, human rights, and economic, legal and social reform. On a local level, OSI implements a range of initiatives to support the rule of law, education, public health and independent media. At the heart of all this work is the notion of an open society, which is “a society based on the recognition that nobody has a monopoly on the truth, that different people have different views and interests, and that there is a need for institutions to protect the rights of all people to allow them to live together in peace. Broadly speaking, an open society is characterized by a reliance on the rule of law, the existence of a democratically elected government, a diverse and vigorous civil society, and respect for minorities and minority opinions.” 14 As an example of the OSI’s work, take the Human Rights and Governance Grants Program (HRGGP), which provides support to nongovernmental organizations (NGOs) focusing on human rights and governance in Europe and Central Asia. The program manages grantmaking programs in the areas of human rights and government accountability. In the area of human rights, the program supports national and international advocacy organizations promoting political and civil rights at local, national and regional levels, with priority given to projects that address the needs of vulnerable and marginalized groups and those that have strong monitoring and legal advocacy components. In 2004 alone, HRGGP supported over 100 organizations operating in approximately 25 countries. Among other activities, grantees submitted complaints to the UN Human Rights Committee on human rights violations in Tajikistan; represented victims of human rights abuses in Chechnya at the European Court of Human Rights; initiated test cases to combat discrimination against the Roma people in Bulgaria; and monitored conditions in mental health institutions in Estonia.

4. STEPHAN SCHMIDHEINY Our second barefoot billionaire was dealt a bad hand—but came out ahead. Ask him to explain his work and Stephan Schmidheiny is likely to insist that there has been nothing unusual about his involvement in social enterprise. “Entrepreneurship is a timehonored tradition among the Schmidheiny clan,” he says, noting that, when he was young, “My father Max and other family members often discussed business affairs in my presence.” At the same time, however, “my forebears also instilled in me the deep conviction that wealth demands responsibility.” 15 Unfortunately, however, part of the family wealth was founded on asbestos, the apparently magical material in which his grandfather had invested alongside the emerging cement industry. When Schmidheiny’s father divided his estate among his children, Stephan got the Eternit Group. “At age 29, I found myself responsible for a business with plants in more than 20 countries and tens of thousands of employees,” he recalls. Unfortunately, Eternit—which made asbestos-based building products—was also the business with the greatest exposure to asbestos problems.

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“The controversy over the potentially harmful effects of asbestos dust was a shock to me in many respects,” he stresses. “I myself had been dangerously exposed to asbestos fibers during my training period in Brazil. I frequently helped load asbestos bags and pour the fibers into the mixer, breathing in deeply all the while due to the exertion the work entailed. At the end of a hard day’s work, I would often be covered in white dust.” Although his advisers argued that the case against asbestos was not proven, his instinct suggested that Eternit should be going asbestos-free as soon as possible. The company invested in new equipment, filters and staff training, but Schmidheiny went a step further. “I made a radical decision: even though I did not have the faintest idea of how this change was to be implemented, I publicly announced that the group would cease to manufacture products containing asbestos—much earlier than the ban eventually imposed by the European Union. I clearly remember the words of one of the plant’s technical managers following my announcement: ‘Young Schmidheiny is mad! He expects to manufacture Eternit products without asbestos. It’s like trying to come up with dry water!’” The success—and longer-term profitability—of the move ensured that Schmidheiny was noticed in the wider world. In the early years, the media coverage wasn’t always helpful, however. As the asbestos issue heated up, Schmidheiny says, “I found myself on the front pages of the newspapers, linked to the harmful effects of asbestos, the very effects from which I was trying to protect society, my employees, and the group. This was very hard, not only for me, but also for my family and friends.” Two other areas of his life helped counteract the stress. One was the building of the family’s art collection, the other his growing philanthropic activities. In the mid-1980s, he had set up FUNDES, which promotes small- and medium-sized enterprises, with the aim of creating jobs and income for the underprivileged. After a trial period in Panama, this approach was replicated in other Latin American countries. And the more he did in this area, the more Schmidheiny came to believe that “helping small businesses and small businessmen to get to know the economies of the developing world was one of the most effective ways of helping people to create sustainable ways of life for themselves.” As his diversification away from asbestos-based products accelerated, Schmidheiny acquired interests in such areas as “gypsum products, packaging materials, plantations, real estate, forestry, water pipes, newspaper stand chains, private banks, steel production and marketing, cameras, microscopes, scientific instruments, electric and electronic devices, and watches, among many others.” Usually he was buying into businesses that were in dire straits, then rebuilding them and selling out to new owners. Take watches. As the Swiss watch industry came under intense pressure from Japanese competitors, a group of banks took over the largest Swiss watchmaker. They, in turn, asked Schmidheiny to invest. “The outcome of this business adventure,” he notes, with understandable pride, “was the successful Swatch Group.” Actively engaged in the initial development and restructuring stages, he eventually sold out at a considerable profit. “The yields from my investments more than exceeded my expectations,” Schmidheiny says. “On the average, I have sold my companies for five to seven times what I paid for them. For each failure, I have had seven successes.” So how does he do it? One key to his success, he explains, is that “I have always observed and studied social movements, seeking to detect the first signs of change in what seemed to be a static context. This is one of the reasons why I recommend to my fellow business leaders that they become interested in the society around them. It is the best early warning system to detect both risks and opportunities.”

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As a founder of what is now the World Business Council for Sustainable Development (WBCSD), which pulls together 180 major companies, Schmidheiny has been successful in finding ways to get these messages across to big business. But over time it became clear that neither traditional philanthropy nor standard corporate response would resolve many of the problems that the world now faces. New forms of leadership are needed. To date, AVINA has invested over $200 million in leaders. “Probably the term invest best reflects our changed paradigm,” he says. “Traditional foundations make donations. They grant money to finance a given project and expect reports on how that money has been spent. As a rule, little is done to evaluate the results achieved. Has anything changed? Has anything improved? If so, what and how? To invest implies that we expect some sort of return, essentially high dividends for society and the environment. It also implies that we expect to be able to help determine the nature of that return.” Today, AVINA’s partners are active in many areas of what would nowadays be called sustainable development. They promote democratic processes. And they also promote the rational use of natural resources, access to the job market, eco-efficiency, social responsibility and the consolidation of civil society organizations. But, however much may have been achieved, Schmidheiny continues to fret about the pace of progress. “I am not entirely satisfied,” he concludes. “I feel that we will not attain sustainable development until many more organizations are motivated by a vision of this sort of progress.”

4. BILL AND MELINDA GATES Our third barefoot billionaire co-founded a money-making machine. In an unprecedented melding of fortunes, the world’s second richest person—Warren Buffett—announced that he would give the bulk of his $40 billion-plus wealth to the Bill and Melinda Gates Foundation, creating the world’s biggest foundation. The decision of the socalled “Sage of Omaha” to back the Gates is seen as a ringing endorsement of the shift towards “venture” or “strategic” philanthropy. Originally, pioneered by people like George Roberts, this brings many of the skills of business to the world of charitable giving. The impact on social policy could be profound, internationally 16 . The news came just after Gates had announced that he would give up his full-time role at Microsoft by 2008 to concentrate on his philanthropic work. So how do Bill and Melinda Gates see the role of foundations such as theirs? “Sometimes we’re asked how we can be optimistic about the future,” they say on the Foundation’s website. “After all, our Foundation and its partners are tackling some of the most challenging problems in the world, the nation, and our own region: every year, 3 million children die of diseases that are completely preventable; only 70 percent of students graduate from high school—and just 50 percent of African-American and Hispanic students do; internet use among African-Americans and Hispanics trails that of whites by more than 20 percentage points; and more than 8,000 people in Seattle will be homeless tonight.” But, they say, “We’re optimistic because, while the statistics are daunting, we know these problems can be solved. Many of the answers already exist. But they require that public and private sectors step up their investments dramatically to reduce the inequities that divide our world.”

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The Bill and Melinda Gates Foundation aims to act as a catalyst, working “with a diverse mix of partners—governments, other foundations, the private sector and nonprofits—to increase the momentum, scale and sustainability of change. Our grantmaking matches our passion with pragmatism, aiming always to create long-term, systemic change and develop models that can be replicated. We want one success to lead to another.” Their focus is on health, which they see as “the cornerstone of human development. When health takes hold, life improves by all measures. Conversely, poor health aggravates poverty, poverty deepens disease, and nations trapped in this spiral will not escape without the world’s help. In Africa, the cost of malaria in terms of treatment and lost productivity is estimated to be $12 billion a year. The continent’s gross domestic product could be $100 billion higher today if malaria had been eliminated in the 1960s. And if HIV infection rates continue at their present levels, the world will likely see 45 million new infections by 2010 and lose nearly 70 million people by 2020. That’s 70 million of the most productive members of society—health workers, educators and parents.” The Foundation takes a four-stage approach. “To begin, we invest heavily in research to help discover new and better products, particularly vaccines. The foundation also supports work to develop products that can be manufactured and distributed. Then, once a product is developed, we work to make sure that there are systems in place to adopt and sustain these new drugs as they become available. The foundation is a major supporter of the Global Alliance for Vaccines and Immunization (GAVI). This alliance has provided basic immunizations to over 8 million children who would not otherwise have been immunized. As a result, GAVI has already saved an estimated 500,000 children’s lives.” On the basis of such successes, the Gates conclude that, “While the world around us fuels our sense of urgency, it also fuels our optimism. We believe that by increasing equity and opportunity, the world will become a better place for generations to come.”

5. KLAUS AND HILDE SCHWAB World Economic Forum hosts take social entrepreneurs under their wing. It isn’t hard to see why some people have chosen to cast Klaus Schwab as a modern Machiavelli. Behind the scenes, there is no question that he has had a profound influence on world politics in recent decades. And few places are now more strongly identified with the “top down” approach to politics and business than Davos, thanks to the annual World Economic Forum (WEF) summits hosted in the small Swiss ski resort, already famous for the nearby “Magic Mountain”, itself immortalized by Thomas Mann’s 1924 novel. Yet the Forum has long said that it is “dedicated to improving the state of the world” and in recent years its summits have increasingly included some of the world’s most prominent champions of “bottom up” approaches to change. So what’s really going on? Perhaps some people have even wondered whether there might not be parallels with the main character of The Magic Mountain itself, the shipbuilding engineer Hans Castorp. Traveling from Hamburg to Davos to visit a tubercular cousin in an Alpine sanatorium, Castorp becomes fascinated by the world and concerns of the isolated “consumptives”. Instead of the three weeks he had originally planned to stay, he ends up spending seven years in the sanatorium, involved in deep questioning of the universe and everything in it.

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Some of Klaus and Hilde Schwab’s long-standing supporters may well be asking whether they themselves have become infected by the feverish concerns of a fringe group of social change activists. Do they, too, need to be warned—as Castorp was—of the dangers of “foolish flirtations” and “empty talk”? No, Professor Schwab insisted after the 2005 WEF summit, the social agendas that are increasingly such a feature of the Davos events were being brought to Davos by politicians like Prime Minister Blair, President Chirac, ex-Vice President Gore and Chancellor Schröder, and by business leaders from around the world. Nor should this come as any surprise. The pressure on politicians and business leaders to deal with issues like HIV/Aids, poverty and climate change has been building for much of the last decade. As globalizing capitalism built up a powerful head of steam through the final decade of the 20th century, it inevitably triggered a political push-back. Most dramatically, a diverse array of protestors took to the streets of Seattle in 1999 in an attempt to derail the World Trade Organization (WTO)—and a series of later summits were also targeted, among them the annual WEF meetings. Few would deny that these protests helped spur rethinking in such institutions as the International Monetary Fund, the WTO, the World Bank and, yes, WEF itself. But, it turned out, the Schwabs’ interest in social entrepreneurs was far from a knee-jerk reaction to the protests. They had already founded—in 1998—what would eventually be known as The Schwab Foundation for Social Entrepreneurship. This was a year before the so-called “Battle of Seattle”, and the shift in their focus was clear from the outset. “We wanted to create a mechanism that works from the bottom up,” Klaus Schwab has stressed. But surely this approach cuts across the elitist model that had characterized WEF events for decades? No, it isn’t a question of either-or, Schwab counters, arguing that it is increasingly evident that “social progress cannot depend only on high level cooperation among global decision makers, but also requires community-driven social entrepreneurship on a broad scale.” At times, Klaus Schwab can almost sound like the anti-Davos protestors. “War, poverty, environmental destruction, social unrest and turmoil—the problems facing the world’s current and future generations—exceed any we have known before,” he argues. “So they cannot be solved with old approaches. New approaches are needed, and social entrepreneurs are their pioneers. In some of the world’s poorest communities, men and women are realizing that their only hope for a better future lies in their own hands. It is their capacity to visualize and mobilize solutions for their communities that will reverse current trends and save lives. With creativity, ingenuity and heart, they confront the tides of apathy, hopelessness and desperation that permeate their societies. And slowly, with perseverance and dedication, they begin to generate change.” But why the apparently counter-current interest in social entrepreneurs? “My belief always has been that in the end, economic and social progress can only be achieved through entrepreneurship of all kinds,” he explains. “The Foundation enables us to encourage and foster entrepreneurs working for the public interest—to support them and provide them with funding and access to a platform that they might otherwise lack.” The objective: to build a global community of outstanding social entrepreneurs to help drive social change. “Social entrepreneurs are unusual leaders,” he says, “the kind we urgently need in our complex, more interdependent world. They accomplish the extraordinary for the public good, often at great personal sacrifice. They challenge the usual or “inevitable”, identifying pattern-breaking approaches to resolve seemingly intractable problems.”

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So what has been the impact of the Schwab Foundation’s leveraging strategy on its community of now 81 social entrepreneurs and their 72 organizations 17 ? In its first 5-year review, it asked its social entrepreneurs to identify the financial, in-kind and media support that could be directly attributable to the Schwab Foundation’s efforts. Here are some of the results. o

As a direct result of the Foundation’s efforts, in 2004 alone social entrepreneurs report they had mobilized a total of $76 million. This meant that each social entrepreneur has been able to raise, on average, about one million dollars. This did not include in-kind resources.

o

Since inclusion into the network, the average number of beneficiaries reached by these social entrepreneurs’ efforts had increased 3.5 times.

o

As a result of the Foundation’s nominations, social entrepreneurs in its community have received a total of 41 other awards that have also brought financial support and international recognition to their efforts. Because of the Foundation, 325 articles and television programs have featured their stories.

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Finally, one-third of the 72 organizations in its network have increased the number of countries in which they are working, with the highest reporting an expansion from 10 countries before joining the network, to 18 today.

6. JEFF SKOLL Our final barefoot billionaire backs barefoot entrepreneurs—and George Clooney. Jeff Skoll’s first moment in the media spotlight came when, as the first full-time employee of eBay, the internet auction company, he helped build one of the great dot-com success stories. By early 2004, his 7.9 percent stake in the company was worth around $3.7 billion. From 1999, he began to plow a growing share of this wealth into the Skoll Foundation. This invests in social entrepreneurs through three award programs, notably the Skoll Awards for Social Entrepreneurship, which support established social entrepreneurs around the world 18 . In 2003, the Skoll Foundation also launched the Skoll Centre for Social Entrepreneurship at the Said Business School, Oxford University, creating an international MBA program in social entrepreneurship. At the Skoll Centre, the Foundation advances the field directly through the academic work of the Centre as well as indirectly by convening the Skoll World Forum on Social Entrepreneurship, an annual conference that connects social entrepreneurs and the world’s leading thought leaders in the emerging field of social entrepreneurship. In addition, the Foundation connects social entrepreneurs with key people and resources in the social sector through Social Edge, an English-speaking online community where members network with each other, learn from leading thinkers and practitioners through ongoing interactive forums and share best practices 19 . Now, alongside his foundation, Jeff Skoll has created Participant Productions, a hugely successful independent film company. As Fortune magazine puts it, “He’s out to save the world, while getting even wealthier in the process.” 20 The idea is to find and fund feature films and documentaries that tackle social justice issues. The group has partnered with Warner Brothers on two feature films: Syriana, a political thriller about international oil espionage, starring Matt Damon and George Clooney; and North Country, based on a true

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story about sexual harassment in a Minnesota iron ore mine, starring Charlize Theron and Frances McDormand. Participant Productions was also the force behind the Al Gore movie, An Inconvenient Truth. The idea is that by putting up half of the capital needed for a film, Participant Productions will make it easier for big studios to take on projects that are not sure-fire commercial successes, including stories focusing on social entrepreneurs. Working with groups like Amnesty International and the Sierra Club, Skoll is also determined to find new ways of developing buzz around such films and, importantly, to ensure that a growing proportion of those who see the resulting films get involved in tackling the issues. But why is Jeff Skoll doing all of this? The answer is that—like Bill Drayton, Stephan Schmidheiny and the Schwabs—he has reached a series of uncomfortable conclusions. “The rapid industrial and technological advancements of the last century have led to many breakthroughs,” he explains, “but they have also left us to confront an uncertain future. With real threats of environmental and economic collapse, terrible diseases, over-population, war, terrorism and menacing new forms of weaponry, we have much to overcome.” 21 Worryingly, he continues, “Efforts by our governments and institutions have proven insufficient to reverse these destructive trends.” The solution? “Our best hope for the future of humanity lies in the power and effectiveness of socially motivated, highly empowered individuals to fight for changes in the way we live, think and behave.” Of course, as Skoll himself accepts, you could have said something similar at various other points in our history. “Those exact same words could have been said 100 years ago,” he muses. “And 200 years ago. And 300 years ago, at the beginning of the Industrial Revolution. And in some similar form, those words could have been said, with equal truth and equal immediacy, in virtually every era back to the dawn of humanity.” One reason is that, time and again, our own tools and technologies create a new generation of problems and risks. But there are aspects of the modern world that make today’s challenges even greater. “We can split the atom, walk on the Moon, communicate with another person anywhere in the world in the blink of an eye,” Skoll observes, “and yet poverty, violence and illness in much of the world are as bad as—or worse than—they have ever been.” Ultimately, however, Skoll is optimistic about our ability to crack even these problems. “The nature and the wonder of humanity,” he argues, “is that while there are always tumultuous events and seemingly overwhelming challenges to face, people, exceptional individuals and ideas and movements emerge to face these challenges and to find solutions.”

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http://www.answers.com/topic/barefoot-doctor#after_ad1 http://www.soros.org/about/bios/a_soros 3 www.avina.net 4 My Path. My Perspective, Stephan Schmidheiny, www.avina.net 5 http://www.gatesfoundation.org/AboutUs/QuickFacts/Timeline/ 6 www.schwabfound.org 7 www.skollfoundation.org 8 http://www.pbs.org/opb/thenewheroes/ 9 David Bornstein, How to Change the World: Social Entrepreneurs and the Power of New Ideas, Oxford University Press, 2004 10 Bornstein, op. cit. 11 Bill Drayton, The Citizen Sector Transformed, in Leading Social Entrepreneurs Changing the World, Ashoka Foundation, 2004 12 http://en.wikipedia.org/wiki/George_Soros#Currency_speculation 2

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http://en.wikipedia.org/wiki/George_Soros#Soros.27s_view_of_potential_problems_in_the_capitalist _free_market_system 14 http://www.soros.org/about/faq#c_programs_at_osi 15 Stephan Schmidheiny, op. cit. 16 Richard Beales and Andrew Jack, Buffett to give bulk of fortune to Gates, Financial Times, 26 June 2006 17 Some organizations are co-founded 18 The other two are the Skoll Awards for Innovation in Silicon Valley, which fund innovative, entrepreneurial nonprofit organizations working in and for California’s Silicon Valley; and the Skoll Social Sector Program, which helps strengthen infrastructure for the social sector. 19 www.socialedge.org 20 Adam Lashinsky, EBay’s first hire goes to the movies, Fortune, March 7 2005 21 Jeff Skoll, Social Entrepreneurship: The 21st Century Revolution, speech to the first Skoll World Forum, Oxford, March 30, 2004