October 6, 2016
Every year, we talk to dozens of people who are running or wanting to run social enterprises. Over the last 5 years, we’ve seen hundreds. These people all share a deeply held passion to solve a social problem, and are seeking to do this using the marketplace.
By now, we are becoming aware of some social enterprise success stories. The Big Issue was an early social enterprise to gain widespread awareness. More recently, enterprises like STREAT and Thankyou Group have enjoyed mainstream media coverage.
But what happens to those that don’t work out? Like any small business start-ups, social enterprises are inherently risky. For any 10 ideas, perhaps 1 will see the light of day. But what happens to others? Have their efforts been wasted or are they important building blocks to success? How can we be efficient in our failures – or ‘fail fast’, as lean start-up theory suggests?
This is a conversation with Lexi Randall-L’Estrange, co-founder of the now defunct social enterprise, The Work Well. It highlights an essential requisite for a thriving social enterprise sector – understanding failure.
Social Traders would like to thank Lexi for her honesty, and incredibly valuable insights.
Lexi was part of Social Traders’ Crunch program in 2015 and we count her learnings as one of our successes.
You can listen to Lexi and ask her further questions via a webinar next Thursday 13th October at 12pm. Register here.
Can you describe your social enterprise and explain what the driving motivation was behind starting it?
The Work Well connected passionate professionals with meaningful short-term projects via an online platform. It started in August 2013 when, while working remotely from overseas, I wanted to do meaningful volunteer work in the city I was living in. Volunteering opportunities were geared at students, soup kitchens, orphanages etc. but I was surrounded by developers, journalists and really talented people, “digital nomads”, who could support the operations and impact centre of the organisations, like their marketing, website, HR strategy etc. It seemed like such a waste.
What steps did you go through to try and get it established?
In 2013 I started thinking of the idea and began to scope it. In 2014, I started testing the idea with different organisations and intermediaries, and uncovered a big issue – who pays? We wanted to avoid the volunteer pay system and focus on attracting candidate quality and prestige. In 2015, we entered Social Traders’ Crunch and after seeing which sectors were underserviced in Australia that could really use assistance, we changed to a national focus on social enterprise and early stage organisations.
When did you decide to ‘’call it quits?’’ What factors played into this decision?
There were a few reasons that led to quitting. Firstly, no matter how we tried the business model just didn’t stack up and as such we didn’t seek investment. Secondly, we’d iterated the concept so many times the connection to the social purpose was becoming less clear; and thirdly competing priorities of the technical co-founder meant that further investment of time wasn’t worth the risk to his existing business. Additionally, it was also having an adverse impact on my mental health and I didn’t have it in me to bootstrap for another year or two.
What helped you make this decision?
Going through Social Traders’ Crunch was crucial for developing the business model and exploring the pricing and volume required to be sustainable. Once we had realised that the initial model didn’t work, we tried new pricing, then we revisited the technology to see what opportunities there were for the technology to “do more of the work” so we could bring the pricing down. When we realised this wasn’t possible I think we knew it was over. We could have built it as a purely commercial venture but it didn’t seem worth the effort. Also, during the course of the incubator and the time leading up to it, several competitors and competing alternatives emerged, and without the ability to invest as heavily in the product development we didn’t feel we had any competitive advantage, nor desire to compete where the need was not compelling.
What role did participating in an accelerator program have in how your enterprise progressed, and your final decision to stop?
Participating in an accelerator program like Social Traders’ Crunch was hugely beneficial. It certainly gave much greater clarity around what a social enterprise can be and how to approach business modelling. I wouldn’t have been able to stop without doing Crunch because I needed to know what needed to be tested.
How did you extricate yourself? How have you managed impacts on the team, investors, and your personal brand?
We stopped before getting investment which made it a lot easier, however there were many people personally invested in it, such as our mentors and volunteers, and I think this was the hardest issue to face. At the time of quitting I was feeling very sad, ashamed, confused, exhausted. I knew I wanted to quit long before I had the energy to write a farewell email – So many resources and so much support given! There was disappointment but mostly a shared sentiment that it was a good first attempt and there will be other opportunities to develop or work for other social enterprises and start-ups, so best scrap this one now and make sure we’re recovered and focused before the next opportunity comes along.
Looking back on your whole experience with The Work Well, what impact has it had on you personally?
It was something I needed to do if only to prove to myself that maybe being the front and centre of an enterprise is not for me. It requires a lot of discipline and stability in your life. The experience has had quite a profound impact on my general wellbeing. I began suffering from anxiety and I think this was largely due to the feeling of being on a train you can’t get off and the general strain of living a double life, working for one business while trying to start another. Kudos to everyone who pulls it off! It really challenged my core values and assumptions, but I’m so grateful for the experience. I feel like I have finally blossomed as an adult and I’m ready to “start” whatever this next great phase is. Like turning 18 all over again!
Is there any advice you have for social entrepreneurs starting out?
Have a clear idea of the change you are trying to create. How will the world be different with your product / service in it? You need to be compelled by this vision because you are the face of your social enterprise and people want to believe your vision. Can you create impact straight away or does the idea only work at scale? If it requires scale, what sort of capital is required and is it feasible? Will you need investment? Understand your personal strengths and weaknesses. Does your business only work with a co-founder? Does that cofounder have specialised skills i.e. software or finance? If so, try and find that person early. Understand early if the social enterprise model is right for the problem you are solving. Maybe you’re just a purpose driven business, which is fine, maybe you’re better as a not-for-profit. Choosing the right business and impact model is crucial for setting yourself up for success. If there are key players missing / not participating, people who should or could pay who aren’t yet being incentivised to do so because of regulation, for example, then maybe the time is not now. Understanding the external forces is really important in the decision to enter any market and social enterprise is no different.
Would you have done anything differently?
There’s always a niggling “what if I tried this” and in reality there are probably other avenues available to explore. The real question is, do you want to keep going and is what you’re trying to achieve worth the effort going in to it? I believe the biggest impact we can make, more often than not, is in our family, network of friends, local community, and at work. To do this, to be caring and supportive, we need to be strong, healthy and taking care of our mental well-being. There’s no doubt that incubators can be intense, so basically, keep self-care at the top of your daily to-do list and check in with your networks to see how you’re going and let them support you too.
Has this experience made you stronger and keener to start a social enterprise?
Definitely, but not for a while. Part of the experience was understanding my own limitations.
I work in a small business / early stage company in my day job. Starting a social enterprise is like that, but harder, because you have beneficiaries to think of as well! You have to have a passion for running a business, which I still have, but I would be doing a lot more research and cost modelling before trying to get anything off the ground next time.
How important is a positive attitude toward ‘failure’ in creating a culture of innovation in Australia? What more can be done to create this positive attitude?
Fundamental. To accept and celebrate failure is really about being confident in saying I had an idea, I tested it, it didn’t work. It puts the emphasis, duly so, on the idea or business model rather than on the person. It’s to say you are not a failure, you’re an innovator. We need that level of comfort / acceptance if we are to truly encourage people to fail fast. Which means less burn out, less resources wasted, and sooner to the next idea! I think the way we idolise the solo entrepreneur / innovator, and the obsessions with “overnight successes” or reaching impressive scale, all of these things are really unhealthy and make success harder to measure and failure harder to “admit to”. The truth is that every entrepreneur has a team around them that makes the idea happen, and plenty of success comes from a long build up and focusing on the quality of the service rather than just the numbers. Everyone benefits from a fail-fast and learning oriented culture.
Interview conducted by Lisa Boothby, Head of Enterprise Development, Social Traders