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Brian Blum

Business Advice for Social Entrepreneurs

by Brian Blum on August 3, 2009

in Israel,Startups

As the 16 “social entrepreneurs” took to the stage last Thursday to present their 15-second “elevator pitch,” I was filled with anticipation. What would the next generation of hi-tech founders come up with?

Here were some of Israel’s best and brightest, hand selected by the Presentense organization which aims to arm young people who want to do good with solid business skills and knowledge.

And at first glance, the strategy has paid off handsomely. The participants in the Presentense “launch night” were confident and personable. The first ever publicly presented elevator pitches on their would-be companies – from subjects as diverse as fostering peace in the Middle East to making prayer more accessible – were polished and presentable; none would have been out of place in a corporate board room.

After the on-stage performance, each Presentense “fellow” manned a table equipped with a laptop, business cards and printed collateral material for the 500 or so guests to peruse and pocket.

As I weaved between the entrepreneurs’ pitches, I found myself enthralled by the creativity…but confused by the business models behind many of these pre-seed startups. It’s not that Presentense didn’t prepare its participants properly; it’s more the nature of social change-focused non-profits which have lofty goals but that all too often rely on philanthropy not profits.

But I’m feeling up to the challenge. So let me here present some of the projects that most stood out for me, and let’s brainstorm together on how each could, if not actually generate enough revenue to make its founders rich, at least sustain itself as a social entrepreneurial success.

CreaTV

As a media guy, I found CreaTV fascinating – a marketplace of sorts matching up amateur movie makers with professionals to develop quality products for YouTube or broadcast television. CreaTV is targeting the Israeli market initially and will reach out to students at Israel cinema schools. Founder Elad Kimelman describes himself as an “enthusiastic Zionist” who believes that Jewish-produced media can help bind together the Israeli and Diaspora Jewish communities.

Kimelman hopes that the company will generate projects that receive funding from Israeli production companies; CreaTV would then take a cut. That’s not a bad idea, but unless there are a lot of financed productions, it’s hard to see how the site will sustain itself in the interim. YouTube is drowning under bandwidth costs and parent Google still hasn’t figured out how to sufficiently monetize the site.

A Vimeo model, where CreaTV charges for video storage above a certain monthly file size and bandwidth limit might work (although rumors are that Vimeo is in financial trouble). CreaTV could also adopt the approach of recruitment classifieds, charging a fee when a match is made. But that seems to go against the company’s do-good goal of fostering partnerships.

MediaMidrash

MediaMidrash is another media startup that I liked a lot. Founders Russel Neiss, a librarian, and Charlie Schwartz, a rabbinic student at JTS, dream of creating a site where all of the Jewish videos in the world could be uploaded for teachers to use in school classes. Moreover, teachers could include curriculum to enhance the videos (from both the videomakers themselves and independent instructors who find the videos useful).

My first job back 20 years ago was as the at the San Francisco Bureau of Jewish Education’s media department. I was in charge of taking orders from teachers and sending out films, VHS tapes and even filmstrips (remember those?) I would have loved a computerized database like MediaMidrash.

Again the question: how will this make money? I spoke with Neiss who said it was a low cost operation and that he could run it while keeping his day job. I pointed out that, if MediaMidrash takes off, bandwidth and storage costs will quickly outstrip a volunteer job. The company’s documentation talks about offering premium services such as creating custom video and course material, staff training and websites.

In general, I think this “freemium” model – where you give away most of the content for free and upsell paid services – is the way to go. But creating new video and course content will require specialized staff – whether in-house or outsourced – and the mark-up in order to keep the company going (and pay its founders) may prove prohibitive to Jewish day schools already suffering in a post-Madoff era. Let’s hope that’s not the case.

JewTo

Jewto.com is a great name that founder Melissa Berg somehow snagged – finding a short and catchy URL like that is almost unheard of these days. Berg wants to create a mashup of Craigslist-like classifieds with a global guide to Jewish resources. Think every kosher restaurant in the world and mezuzas for sale.

Berg talked to me about hiring staff to write about all things Jewish in your city, but a more scalable model would be ape Yelp, the popular U.S. reviews and rankings site, where regular readers like you and me write the reviews of restaurants, dentists, bars, beauty salons and more. No need to pay when users contribute for the fame and glory.

Jewto can then upsell premium placement – such as your restaurant at the top of the listings (clearly marked as sponsored of course) – along with tools such as table booking, menu listings and take out. Yelp also sells display advertising – so should Jewto.

Berg should also look into partnering with fellow Israeli startup Bite 2Eat for the restaurant booking functionality as well a to look into whether Yelp or a similar site licenses its engine to third parties.

Jewto is a huge project but the business model – if done right (and it will need VC financing to pull off) – has real potential.

Peula

Did you ever receive crappy service from a store or government office? Wanted to complain but didn’t know how? Peula.com is here to help. The company is building a system to automate letter writing and to gather support from similarly minded aggrieved individuals online. Peula then sends your complaint on the right person.

Peula’s secret sauce is that when the target of your complaint responds, the reply is sent to all of the people listed on your e-complaint which means the responsible party’s response is tracked publicly.

Peula hopes this will differentiate it from its already formidable competition. In Israel, there’s atzuma.co.il, tluna.co.il, and shout.co.il. In the U.S. and U.K., companies like PlanetFeedback and HowtoComplain, and even the Better Business Bureau provide similar services – all for free.

Since the competition doesn’t charge, neither can Peula. Ads and sponsorships on the site are the company’s main business prospects. Allowing users to print letters for a fee, as founder Romi Shamai suggested to me, doesn’t make a lot of sense – users could too easily just copy and paste. There are probably additional added value tools Peula could add that I haven’t thought of yet.

The Open Siddur Project

Perhaps my favorite entrepreneur of the evening was Aharon Varady who is trying to create an online siddur (prayer book) with versions and commentaries from every source imaginable – from Rashi to Jewish Renewal plus user-contributed content. Spiritual seekers could then mix and match how they want to pray and print out their own personal siddur. “Imagine if the first siddur presented to a day school student was actually crafted by that student over the course of a year while being introduced to the liturgy in class,” Varady says.

As someone who struggles with prayer myself, I would love to have a site like Open Siddur. Varady is committed to “keeping this resource completely free.” So how to make money? Varady hopes to charge for printed copies through partnerships with print-on-demand printers.

But what would keep someone from simply generating their on their home printer? Those of us in the Internet publishing business have all learned the hard way that users won’t pay for content online. The print-on-demand model could work, but since each siddur would be customized for the individual, the volume would be low and as a result any partnership revenue from the POD guys would be similarly small.

Selling services around the siddur project – Jewish designers, calligraphers, scholars and even freelance editors – and taking a cut might be a better direction.

The Israel-Asia Center

The Israel-Asia Center seems to be the most mature project in the 2009 Presentense fellows program. The company already has a working website – a news magazine focused on “promoting partnerships between Israel, the Jewish people and Asia, with a strong focus on China.”

The management team includes an Israeli professor in China, and founder Rebecca Zeffert, a PR specialist and Chinese Studies graduate. They’re backed by a 20-member volunteer team in Israel, China, the U.S. and India. The company also has an impressive advisory board.

The Israel-Asia Center’s business model also makes sense: use the website as a platform for selling services – course syllabi on Israel-China relations, speaking engagements, briefings and exchange programs.

Given the growth of China as the world’s second largest economy and Israel’s already existing ties with the Asian giant, I give a hearty thumbs up to Zeffert and crew.

There were a bunch of other entrepreneurs at the event that I didn’t get a chance to talk with. Will they all succeed? Certainly not. Do they deserve to? Absolutely. Do I have all the answers? Not a chance. But this is just a start; some friendly advice, and I have no doubt these fledgling startups will receive plenty more.

What do you think? Which directions would you point these worthwhile endeavors. Drop me a line or leave a comment on the blog.

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