THE BLOG
11/17/2011 03:30 pm ET | Updated Jan 17, 2012

Meet KarmaGoat: Shepherding Social Enterprise

What do barnyard animals, Craig's List and doing good all have in common? Meet KarmaGoat and I can explain. KarmaGoat is the interesting name for a new, (mostly) online business focused on social entrepreneurship. Here's how it works. Let's say you have a microwave oven that you no longer need. You can give it to Goodwill, let it collect dust or put it out at the curb. But now there's another option-- you can list it on the KarmaGoat site, sell it and the money will go to the charity of your choice. Simple.

CEO Jonathon Lehmann left his work as a lawyer in France to pursue his MBA at UCLA Anderson School of Management. There he met up with James Chung, Jamie Voytko and Tony Vassiliadis. Even before graduation, KarmaGoat was in the works with enthusiastic support from their professors and dean. The young entrepreneurs got the thumbs up when they presented at the Harvard Social Enterprise Conference last spring. And the site went live in May.

The first question I asked Lehmann was about the name. Karma I understand, but where did the goat come from? Lehmann explained,

Well, the goat, we learned is something you can actually buy for families in the developing world in places like Uganda [through Heifer International]. And you can actually buy the gift of a goat, which is a tool for micro-entrepreneurship for these families, for self-reliance and it's sustainable because they're given a goat and they give the offspring to another family. And so that way, micro-entrepreneurship spreads... The idea is to transform the stuff we don't need anymore into the stuff people really need like goats or drinkable water or school supplies. But we thought the goat was a cool symbol. Karma is obviously this concept of cycle and transformation, so you go from stuff to stuff.

KarmaGoat is a for profit company. In the tradition of companies like Newman's Own or TOMS Shoes, giving and doing good for others is built into the company's mission and business model. Lehmann shared some of what has influenced the KarmaGoat team in developing this social enterprise and why they decided against becoming a non-profit company.

We take 15% of every sale to operate and grow the market place. It was an interesting question in the beginning... I don't know that I would have been able to recruit partners like I did if it were non-profit. But in the beginning, the question was do you go non-profit or do you do this social enterprise style? And we quickly made the decision that we wanted to be self-reliant. That we didn't want to have to ask for grants. We wanted to prove that we could do it ourselves. That it could be sustainable like that without anyone having to give us money. When we were at Harvard at the Social Enterprise Conference, I was especially surprised to hear from the non-profit community that they thought that was the way to go. When they asked are you non-profit or for-profit in the beginning, I was almost a little tentative, I wanted to justify it. But they were like, "You're absolutely right. That's the way to go."

It's interesting, we feel that there's a bit of a new paradigm today of giving. Before people were expected to make a lot of money and go to the top and once they were at the top, then give back. But we're seeing something that's different now... We're going to expect them to give on their way up. TOMS Shoes is that. They do good and they make money and the more money they make, the more good they do. That's kind of this new paradigm shift that we really want to be a part of.

Right now, KarmaGoat is based in Los Angeles, where they serve the local community. But they're talking about ways to expand to include shipping, and universities have expressed interest in having them come in and set up shop. KarmaGoat works with 900 non-profits including Heifer International, Starlight Foundation and Somaly Mam Foundation. Their work with the United Way has inspired an upcoming Drop-Off campaign that will benefit UW's Home Walk. They'll set up a temporary store at the United Way office building and list items online offering two ways for people to shop.

KarmaGoat was recently featured in both the LA Times and LA Business Journal. A couple of weeks ago, The New York Times ran a piece about social enterprise. This past Sunday, the Times' Business and Sunday Review sections both contained articles about values, local commerce and corporate responsibility. The Occupy movement continues to capture global attention. It seems Lehmann might just be right about the paradigm shift in giving and a move away from the traditional business model. Hopefully, what you get when you connect four guys with MBA's, a clear vision for giving and goats is a business model that benefits us all.

Check out the KarmaGoat website to buy, sell and learn more about the site and their partners. You can find them on Twitter--@KarmaGoat.