Public Interest Ventures

Public Interest Ventures

I’m always curious about what is happening behind the wall and underneath the streets. The infrastructure (human, informational, mechanical) that constructs our lives is something that we often engage with in superficial ways. When I left the US Digital Service in early 2017 to join the first cohort of the New America Public Interest Tech fellowship, I was given the opportunity to learn a bit about the business models that underpin our public interest technology landscape. Specifically, I wanted to meet the teams building the technology that is increasingly being recruited to advance the public interest.

Emerging field

Public Interest Technology is both emerging and well established in 2018. Chat with anyone of us who had spent some time in the US Digital Service, or doing technology in civil society (like, say, the incredible digital teams at Planned Parenthood), and you’ll hear stories dating back years about how technology best practices have been leveraged for good.

At the same time, there is not a defined field yet. New graduates from engineering, design, and business programs struggle to understand where their skills fit in a landscape of fundraising, direct service programs, and legal advocacy. And even when these opportunities are discovered, it is rarely with the competitive salaries made necessary by the crippling educational debt associated with top programs in the United States. To create a vibrant public interest tech sector, public interest technology ventures HAVE to be able to create appropriate incentives to draw more people with the right skills to this work.

To create these incentives, we need to understand what is happening “behind the walls” of public interest tech. How are the pipes that route capital between organizations configured? How does value get transmitted between donors, customers, beneficiaries, and contributors? Where are the blockages that might lead, ultimately, to a collapse or a failure in the system as a whole?

Who is doing Public Interest Tech now?

In my interviews with different pubic interest tech entrepreneurs and funders, I spoke a lot about the sustainability of these ventures. In this case, sustainability means keeping the business that provides the service or product alive with its employees paid and servers running.

Jimmy Chen told me about what it is to create and run the for-profit, mission-driven software company Propel, which builds better experience and technology for food stamp recipients.

Rohan Pavuluri shared his experience co-founding the nonprofit legal aid platform Upsolve, which helps low income Americans reclaim their financial independence through easier engagement with the Chapter 7 Bankruptcy systems.

Matt Grasser and Chris Guess told me a bit about their journey co-founding and bootstrapping the open-source crisis management system LDLN after their experience responding to Hurricane Sandy and volunteering with Typhoon Haiyan.

And I spoke with an incredible mentor and funder who helped develop Jimmy and Rohan’s work, Hannah Calhoon, about her experience creating the Blue Ridge Lab accelerator program, and how she is iterating on the “how” of bringing public interest technology ventures to life in sustainable ways.

What I learned from them

From these interviews and dozens of others which didn’t make their way into their own write ups, there are a few broad themes that I’ve noticed and that I want to share with the budding (and established) social entrepreneur.

1) Don’t choose your corporate structure too quickly

For mission driven ventures, there is frequently MORE selection than traditional ventures for what kind of tax structure your company will adopt. 501(c)(3) tax exempt status comes with advantages like being able to more easily pursue vital grants from public entities and philanthropic organizations, but it also doesn’t hold the concept of equity for shareholders, meaning that pursuing venture capital and the traditional funding path open to for-profit entities is unavailable. That said, the for-profit entity comes with its own host of obstacles, including seeing your social mission undermined by profit motives and fiscal responsibility to your shareholders. I touch on some of this in my interview with Propel. Sometimes though, the non-profit route is the best choice, as was the case for Rohan and Upsolve. There is no blanket solution, and as you develop your product and understanding of the problem, carefully consider what KIND of organization you’re forming.

2) Failing Fast involves a lot of risk for the people you are trying to help

Building a software product involves a lot of failure. You are trying to create something with the right technical underpinning, that works for the user community you’re trying to help, that is arriving at the right time in the right place on the right medium, AND that has a business model that can pay for the engineers and designers and product managers toiling away at the product. To do this, you iterate on different parts of the product quickly, which often means you rapidly shift directions: shutting down what isn’t working and growing the parts that are.

But what if –in the process of building your software– a community comes to rely on part of your software that isn’t working? What if there’s no business model for providing discrete and free access to consulting for sex workers, for example, but that at-risk community has organically come to rely on your suddenly unprofitable tool.

We have to critically reconsider the tools of software development that we’ve come to rely on if we are going to co-create with communities without doing harm. And as investors and funders, we can take a page from Blue Ridge Lab’s playbook, and re-consider how mismanaged (or even unlucky) growth can undermine the services that smaller populations are already receiving. In other words, we can fail fast, but be careful not to break things.

3) The Philanthropic sector needs more and better exits for social entrepreneurs

For-profit software companies have a wealth of different business models and pathways to success in front of them. For each of these business models, there are often defined mechanisms for support, growth, and liquidation that exist to support the people engaged in those ecosystems. It means that an entrepreneur can start her business, find appropriate sources of capital along the way to grow depending on where her business is, and exit the business via a plethora of different merger and acquisition models. But in the non-profit sector, many of these same models don’t exist. Because equity isn’t captured by the 501(c)(3) model, the idea of a buyout or acquisition doesn’t really exist. Rather, you might see a merger of organizations based on mission similarity, but more often than not, a merger is perceived as a failure in the nonprofit sector. This needs to change, and we need to celebrate the work social entrepreneurs have put into building their organizations. Dahna Goldstein and I explored this in an article for the Chronicles of Philanthropy, which we would encourage you to read for some ideas on how we can start to change.

4) The funding ecosystem has not caught up to software products

Sometimes, you don’t get funding because your idea simply isn’t developed enough. Maybe it’s off the mark. Maybe you don’t have the right team. But sometimes, it’s because the money hasn’t caught up to the needs that social enterprises are signaling. Many of the social enterprises I interviewed were struggling to find capital. It is relatively easy to find funding for the early days. Your team might be subsisting while you put everything towards building the product. But then the next stage of capital isn’t there. Philanthropic capital works in very different ways from traditional venture capital, and so in many cases both funders and entrepreneurs can fall dramatically short of meeting each other’s needs. Many organizations like Fast Forward, Blue Ridge Labs, Omidyar, and others are gracefully experimenting with different funding models, from impact investment to fellowships and different approaches to grantmaking. So as a social entrepreneur, it makes a LOT of sense to consider your business model as something that must be bootstrapped like LDLN did, that might need to grow slowly via earned revenue, and that might have to survive long enough for the industry to catch up.

What’s Next?

As my year with the Public Interest Tech fellowship comes to a close, I’ve walked away with a desire. The program presented a great opportunity to build and explore what Public Interest Tech means, how it works, and WHY it works like it does.

So what’s next? New America’s Public Interest Technology initiative is continuing to grow and evolve. I captured a bunch of my writing on this blog, and will continue to support an open source project I developed called the Grant Calculator. For more of my work and the work of other fellows, I’d encourage you to sign up for the mailing list and apply for open fellowships in the future if what you see interests you!

As for me specifically, since starting the fellowship I moved from Washington, DC to Copenhagen in Denmark, and am working on my own venture in public interest tech with a more international lens. You can keep in touch via Linkedin, Twitter, or email.

Enter your email below to join our newsletter