I am republishing a Letter to the Editor I wrote for the magazine of Johns Hopkins Business School relating to what not-for-profits can learn from startups.
Summary: Non-profits must focus on actionable, quantitative metrics.
Data-Centricity & Non-Profits
As an entrepreneur who has worked closely managing expectations from venture capital investors, I thought Rise of the Philanthropreneurs by Mat Edelson [Fall 2008] hit several hot-button topics that transcend any one industry.
Over the last 12 months I have watched a new movement take shape across the Internet startup world. Startups are moving away from speculative, “waterfall”-style development processes. Instead these early-stage companies are embracing a new “lean” mentality, focused on the insights gained from a rigorous approach to numbers and metrics. In particular, Eric Ries and Steve Blank have championed this lean approach, arguing that before a startup can be ready to accept venture investment, it must develop a “scalable and repeatable business model” made clear by establishing a “product-market fit.” Only when this scalable model is obvious (i.e., clear underlying metrics to evaluate success) does it make sense for a startup
to accept significant third-party financing.
I see significant parallels between this new attitude among startups and the approaches championed by Venture Philanthropy Partners. Ultimately, nonprofits do compete for significant philanthropic investment, and as the saying goes, “You can’t manage what you can’t measure.” Thus I firmly agree that a hands-on, data-centric approach is a great step forward and should make potential donors more comfortable putting their money to work with nonprofits.
I am anxious to see how the startup and entrepreneurial community can better partner with nonprofits—not only from the standpoint of monetary giving—but also in terms of best practices around management, growth, and fiduciary responsibility.
Sam Huleatt (MBA ’08)
Brooklyn, New York