An entrepreneur searches for the ideal business

(Smith Journal, Volume 3)

IN October last year, Simon Griffiths walked across a stage in Melbourne and addressed his audience. It was a TEDx event, with speakers invited on the theme of ‘innovation’. Griffiths wore sombre garb – tan slacks, a grey shirt, and a buttoned-up grey jacket – his beard was trimmed and fair hair plastered down.

“Today I want to talk to you about a very serious issue, and it’s something that’s been close to my heart for a long time. It’s been in the news a lot recently and a lot of politicians have been talking about it,” he said, and then paused for effect.

“I want to tell you about how we can all save the world, using beer and toilet paper.”

Griffiths plied the crowd with many more gentle jokes over the next 18 minutes – he was on a roll with toilet paper puns – but it wasn’t long before he grazed their ears instead, with a troubling insight he’d gained while working on an aid project in South Africa years earlier.

“I realised I’d been in the developing world on and off for about ten years, and I’d seen a lot of the poverty that you guys have no doubt heard about – the 884 million people without access to clean water, the 759 million illiterate adults and the 2.4 billion people without decent toilets,” he said.

But, at the current rate of change, he figured, we wouldn’t achieve global sanitation until 2080 or literacy until 2085.

“I’m 28,” he said. “I’m not going to be alive to see that happen, and I think that’s pretty shocking. We’re leaving these problems for the next generation.”

His next observation was that all aid projects, no matter their merits, lacked sufficient investment. It is this – the funding and philanthropy – that he decided to address. And that’s where the beer and toilet paper come in.

Griffiths’ latest schemes are a bar, called Shebeen, which sells booze from the developing world and pours all the profits from each sale into projects in the drink’s source country; and Who Gives A Crap, a toilet paper brand that’ll flush half its profits into sanitation programs.

The morning we’re scheduled to meet, Shebeen is only weeks from opening, and Griffiths and his team are putting the finishing touches on a crowd-funding campaign for Who Gives A Crap.

Years of capital raising, months of research, weeks of wavering confidence, and – through it all – long days powered by imagination and passion: all of that is about to come alive.

I knock on a door in a narrow street in Fitzroy, in inner city Melbourne. Inside, several bestubbled young men are working at a long table, programming code scrolling down their computer screens.

Griffiths bounces down the stairs to meet me. In person, he’s taller, more dishevelled, and more colourful than he appeared on video. He’s wearing sparkly gold runners and a burgundy jumper patterned with half-peeled bananas. Yes, I think to myself, this is what a social entrepreneur should wear to work.

***

Rewind a few years, however, and the banana jumper wasn’t even a twinkle in Griffith’s eyes. When he was at University of Melbourne, studying engineering and commerce, he was surveying suits instead. For two years, he called and emailed and bothered McKinsey & Company, the top international management consulting firm, for a graduate position.

At the same time, he also applied for a Rhodes Scholarship for postgraduate economics at Oxford University. (He made it to the top four, but eventually missed out.)

“The application process really got me thinking about what my values were and what I truly cared about,” he explains. “I realised that, yes, I loved the problem solving and innovation work you do with someone like McKinsey, but the real outcome is that you’re helping another company to maximise their profit and perhaps they’re not doing it in a way you’re super-psyched about.”

So, when McKinsey finally came knocking with an offer, he turned them down.

“The Rhodes process made me realise I was more interested in the developing world. I wanted to use my skills to create change that I cared about.”

With friends from university, he founded Ripple.org, a search engine in which users click on ads in exchange for charity donations made by the advertisers. Then he skipped town for Durban, where he helped establish Schools 4 Schools, the Oaktree Foundation’s program linking Australian schools with counterparts in South Africa and Cambodia.

But something still wasn’t right. Working in traditional non-government organisations just didn’t appeal; the sphere of influence seemed too small.

“I could see there was a really big funding problem, and everyone was suffering from it. So I started to think about how to change the way people engage with philanthropy,” he says.

And so, Shebeen was born. Or at least, the idea of Shebeen. Another of his university friends, Zanna McComish – who now studies at Harvard Business School – dreamed it up after volunteering in Tanzania. It was going to be a slapped-up, 50-seat, ramshackle venue, replicating the bars they’d drunk at on their travels in Africa. That was five years ago.

They took the concept public in late 2009, seeking to raise $150,000. “We had a huge response and I went on Christmas break thinking, ‘That’s it, we’re going to be trading in a few months time. We’re living the dream.’ Three months later we realised that just wasn’t the case,” he says.

“Everyone says it takes five false starts to get it right and that was probably number one.”

By then, Griffiths had turned his back on a conventional work pathway, and for what? “My friends were saying, ‘What are you doing? There’s no way you can get back into the corporate world and how are you going to make a career out of this? Do you ever want to buy a house?’”

***

Griffiths shows me upstairs, past the nest of hirsute programmers, to where he lives with his partner Melissa Loughnan, the director of independent gallery Utopian Slumps. (The banana-skin jumper is the work of one of her artists, Misha Hollenbach.)

We sit at the kitchen table in the large, open-plan living room. Light refracts through a row of jars along the windowsill, and falls on the concrete floor and the kind of easy-cool artwork and artefacts you’d expect in the home of curator. While we talk, the conversations from the shared studio downstairs rise up like the background hum of a brain.

One reason for Shebeen’s false start, Griffiths speculates, is that even a few years ago, no one really knew what a social enterprise was. “We were too far ahead of the curve. Now, it’s much more common – we don’t have to explain it anymore.”

Microfinance charity Opportunity International says there’s been a decade of “explosive growth” in social enterprises overseas, but only in recent years has Australia begun to catch up. Now, it claims, the sector is one of the fastest growing in the economy.

Social enterprises come in all shapes and sizes, from non-profits in rich countries that create jobs for the long-term unemployed (say, The Big Issue), to profit-making traders in poor countries that sell products to improve the lives of the buyers (say, farm machinery that boosts yields).

The model Griffiths picked is to do business in Australia, and use the proceeds to fund “the smartest guys in the room”. To him, that means aid projects that take an enterprise approach, too.

“We don’t work with handout models,” he says. “We’re always looking at models where individuals who are customers make a purchase, or spend time working on the product, so they have a physical level of commitment.

“We want to invest in organisations that maximise their social impact, and have data on it, and can improve their benchmarks year after year.” At Shebeen, for example, buying a South African wine will help fund libraries and local-language publishing, via Room to Read, a charity set up by an ex-Microsoft executive.

Griffiths is enlivened by this new wave of business-oriented development – despite the sparkly shoes, he’s a data kind of guy – and, likewise, by the potential to secure funding by changing the way ordinary people consume.

In his TEDx talk, he cited products sold by some of “the biggest companies in the world”, including Coca-Cola’s mango smoothie, called Odwalla, which supports Haitian farmers (10 cents from every bottle sold), and a Louis Vuitton bag made with Bono and his wife – part of the company’s “Core Values” campaign – which supports African development projects.

“I think this campaign has a little bit further to go,” Griffiths observed, “but it’s pretty impressive to see someone like Louis Vuitton having a crack at consumer-driven philanthropy.”

Can this be right? Louis Vuitton and Coca Cola doing good? It’s been nagging at me, so when we meet, I ask.

“Yeah, I know. It’s Coke, right?” he replies. “But that’s what’s interesting. These guys who’ve been unethical operators are starting to think more ethically about what they’re doing.”

But for multinationals and start-up entrepreneurs alike, declaring altruistic motives won’t deter the critics – if anything, it invites extra scrutiny. Both Shebeen and Who Gives A Crap promote change by means of aid, trade and consumption – and every inch of that proposition stands on shifting ground. Griffiths has waded into the mire.

“A really tricky part of both businesses is that there are a lot of ethical conundrums and you have to figure out where to draw the line,” he says. “And that’s not easy.”

***

In 2008, Dr Paul Farmer was driving along a road in south-eastern Rwanda when he received a phone call from the Skoll Foundation (a think tank, venture fund and academy for social entrepreneurs, all rolled into one) telling him he’d been picked for their Award for Social Entrepreneurship.

Farmer, the founder of an organisation called Partners In Health, is a physician and anthropologist. He has worked for many years in Haiti, Rwanda and several other countries, and was the subject of Tracy Kidder’s 2003 biography, Mountains Beyond Mountains. Over the decades, he’s received many awards.

But he was ambivalent about this new accolade; he felt it brought him “both honour and shame”. Later that year, he described his reaction at the Skoll World Forum, a conference run by the foundation (PDF). He “winced”, he said, “that we live in an era in which simply seeking to provide high-quality medical care to the world’s poorest is considered innovative and entrepreneurial.”

From the podium, Farmer challenged the “ideology” that the poor must always pay, in order for them to value the support they’re given. True development, he argued, would not occur without investment in public education and public healthcare. “Among some entrepreneurs, it’s not popular to talk of rights. We speak, instead, of ‘product’ and ‘brand’. Patients and students – children! – become ‘clients’ or even ‘customers’,” he said.

“We need to be aware of the limitations of any culture that sees all services as commodities and very few as rights. Let me be clear: this is not some sort of ‘anti-market’ stance. It’s merely the argument that the market alone will not solve the problems we face … we need to do everything in our power to make sure that the public sector does not shrivel and die.”

But once you’re in the mire, it’s hard to stay clean – even for Dr Farmer.

Two years earlier, Bono had fronted the launch of (PRODUCT) RED, a kind of meta-brand licensed to large companies, who donate a portion of the profit from their special RED product lines to finance HIV/AIDS health programs in Africa.

“Philanthropy is like hippy music, holding hands,” Bono said. “RED is more like punk rock, hip hop, this should feel like hard commerce.”

It’s the realm of the “causumer”, where you make the world better by shopping more – by buying a RED iPod and a Gap RED t-shirt, for example, or by maxing out your American Express RED card. “Has there ever been a better reason to shop?” one Amex ad asked.

In their book Brand Aid, academics Lisa Ann Richey and Stefano Ponte criticise Farmer for lending his authority to RED, as an “aid celebrity”, along with Bono and economist Jeffrey Sachs.

The causumer model, they argue, addresses the manifestations of poverty but not its origins. Corporations look good without really changing their business practices, while “consumers engage in low-cost heroism” without learning about “global production-consumption relations or the struggles of living with HIV/AIDS.”

The RED campaign has its own spoof: the BUY (LESS) website, which invites viewers to give directly to RED’s beneficiary, The Global Fund, and to other causes, without consuming anything first. Just below the website’s banner, there’s a stinging call to action: “Join us in rejecting the ti(red) notion that shopping is a reasonable response to human suffering.”

***

While we’re discussing conspicuous consumption, Griffiths gestures at a brown handbag at the top of the stairs – Louis Vuitton. “It’s Mel’s,” he laughs. “And it’s second hand.”

By his own habits, Griffiths is a conscious consumer (“I like to get as close to full information as I can, but in a relatively short time period,” he explains.) He favours second hand goods over new, and after being a long-time vegetarian, only recently began eating a little meat. Occasionally, however, he ignores the rules and just buys something he wants.

“If I didn’t enjoy consumption, I don’t think I would have ended up where I am. My main view is that people should be aware of the impact of their decisions – generally speaking, too much consumption of new goods is not a good thing,” he says. “I want to see that flipped on its head, so consumption can be more positively impactful.”

Who Gives A Crap, Griffiths’ most recent enterprise, also represents a progression in this thinking. A bar can be a great business, but it has certain limitations: some people choose not to drink; young people aren’t allowed to; and most people don’t live nearby. And some aid partners refuse to accept funding derived from alcohol sales. Griffiths has qualms too: “I’m not super excited about people coming into the venue and getting drunk,” he says. “But that’s inevitably something we’ll have to deal with.”

With these drawbacks in mind, he began to puzzle over something new – a suitable mass-market product.

One day, as he walked into his laundry, he glanced at a six-pack of toilet paper. “I had a quarter-second moment where I was like, ‘Toilet paper! And we’ll work with WaterAid on sanitation! And we’ll call it Who Gives a Crap!’” he says, his voice rising with each recalled revelation. “I called three friends and they all just said, ‘You’ve got to do it.’”

As far as causumer products go, toilet paper is the antithesis of a Louis Vuitton bag: it’s a staple, cheap and necessary. But even toilet paper comes with seriously scrunchy dilemmas.

Together with Jehan Ratnatunga – a co-founder of Ripple who now works for YouTube in Los Angeles – Griffiths developed a rigorous business plan. But the duo’s research revealed that they couldn’t turn a profit by manufacturing in Australia. When Griffiths journeyed to China to visit potential suppliers, he was shaken by the working conditions he observed.

“There was a moment where I was sitting on the train back to Hong Kong from China and I was feeling sick in the stomach, thinking, ‘We can’t produce in Australia, but I’m not comfortable producing over here. What do we do?’

“And I sat there and looked at myself and realised that 100 per cent of the items I had with me were made in China and I had no idea where any of the factories were or what the conditions were like inside them. There’s just no transparency.”

He resolved to forge ahead, but to lift the working standards in their chosen factory. “Instead of boycotting, we need to make sure companies who produce in China do it in a way that makes workers’ lives better. With the toilet paper, we can do that up front. It’s a big part of who we are as a company.”

And then there’s Shebeen: visiting every brewer would break its bank. “We’re comfortable enough to trade – brewing is a capital-intensive process, so there’s less incentive to screw your workforce – but we’re not super happy about it,” he says. “In the long-run, we’d like to understand how they work.”

***

I meet Griffiths again, a few weeks later, on location in Melbourne’s CBD. He pedals up the alleyway and brakes at the entrance to a bar – the doorway that will soon lead to Shebeen. Today, he looks more like his TEDx self – tousled hair trimmed and slicked, banana-patterns and runners forgone for a red-striped woollen knit and respectable leather lace-ups.

Inside, the architects are taking final measurements for the fit-out. They’re here, with Griffiths’ fellow Shebeen director and Melbourne bar-scene sage, Vernon Chalker, to make final arrangements with the landlord before they give the builders the green light.

The existing purple curtains and white-leather couches will be demolished and replaced with corrugated iron, smashed tiles and up-cycled stools, among other things: a carefully designed interior that Griffiths describes as “a bit of fun – derelict but really functional”.

This year, at last, their plans coalesced. After painstakingly securing more than two-dozen groups of investors, the team nabbed a sponsorship deal from spirits company Brown-Forman. All up, they raised $250,000. If Shebeen’s profits flow according to plan, they’ll transform that investment into $800,000 in donations within three years.

Another significant transaction will also occur: once the doors open, Griffiths will finally draw a wage. All these years, he’s paid his rent by tutoring at the University of Melbourne (this year, he’s been scraping by on 4 hours a week), topped up by occasional consulting jobs for other social enterprises and companies interested in social innovation – offers that have arisen more frequently of late. Somewhere along the way, the fugitive from corporate consulting acquired useful skills, perhaps even a career.

Right now, that’s all beside the point. Griffiths, Chalker and the architects are leaning over the bar, telling the landlord about their plan for a corrugated lean-to opening onto the alleyway and explaining how it will fit within the intricacies of council regulations (in short: with difficulty). They’re consumed by the details.

“We want someone to come into Shebeen, have a drink and leave – and come back again. The second time, they’ll find out what the concept is,” he explains. “We’re not banking on the guilt factor.”

Occasionally, someone from a more traditional charity challenges him about what’s doing – can he really justify selling booze for a cause?

Griffiths doesn’t mind. He just says thanks, and gifts them a bottle of Shebeen’s wine. “They’ll call up a week later, and say they realised they were being fuddy-duddies, and that yes, they drink wine anyway and they can do it in a smarter way.

“It gets them thinking about what else that means, about other products and about consumption more generally. And that’s what we’re trying to do – to open it up.”

This article was published in Smith Journal. Find a stockist near you!