Building a for-profit social enterprise is simultaneously rewarding and uniquely difficult. These entrepreneurs have to serve two masters - having a profitable business and supporting an environmental or social mission, which often has personal roots. Successful entrepreneurs, however, realize that business must be the foundation and strategic decisions will have to assess when and how to balance the two agendas.
One company that lives this experience is Mavuno Harvest based in Philadelphia, Pennsylvania. Mavuno is a profitable organic dried fruit company started by Phil Hughes, a former Peace Corps volunteer turned social entrepreneur. Impressed by his business, I interviewed him and wanted to share his story.
Phil grew up in Philadelphia, one of three kids in an Irish Catholic family. Not one for a traditional path, he joined the Peace Corps and went to Kenya where he worked with small-scale farmers and helped them realize the economic value of their crops. The idea for Mavuno was planted.
He saw how the farmers suffered post-harvest loss due to spoilage and aesthetics and had limited access to markets. Most farmers were subsistence-level and did not get full value from their crops. Phil's inspiration was to increase farmer income by taking the natural asset that was wasted on the farm and turning it into a value added product. Mavuno does just that - it buys previously unsold fruit, dries it and sells it as a snack food - while paying farmers fairly.
Mavuno had its first sale in 2012. The fruit comes from Uganda and Burkina Faso and is natural, organic, non-GMO verified and Fair Trade certified. In Mavuno's first year, Phil hustled to make the sale and learn. Sales grew dramatically and this year, they are on schedule to grow 150 times from year one.
What did he learn and by extension, what can other social entrepreneurs learn from his experience?
Sales. He didn't think he was a salesman but quickly realized that he had to be. He learned that you have to believe in your product and mission, you can't please everyone, and be yourself - the salesman part then came naturally. He's glad he was such a rookie about the food industry: "If you hit a home run on the first pitch, you don't know what it's like to strike out, what it's like to be sent to the minors, so you don't work on your swing, you don't learn how pitchers are going to pitch to you."
Managing growth. He sells dried fruit from Africa. He can expand his product line and/or supplier countries but he is building on what has worked and not expanding too fast. His supply chains are not well established so he can't ramp up inventory on demand. His focus, however, is on African farmers so he accepts this supply limitation since it has not yet hurt his sales.
Know your customer. Different audiences care about different aspects of Mavuno - the social mission versus the business versus both. He listens to his customers: "People aren't going to buy your stuff just because you have a social mission; you have to meet their standards." Product, price point, and packaging became his focus because the mission story alone was not enough to attract his customers.
Adaptability. There are always new challenges. First, they were personal and stemmed from his newness to the industry. Then, operational - doing most of the sourcing, packing, and shipping orders himself. Now, they are more external, securing quality supply to meet growing demand. Cultural differences also matter. Phil's style is direct, transactional, no BS. His African partners do not share this trait so he has to strike a delicate balance when communicating.
Showing impact. Stories so far are anecdotal. Mavuno pays farmers a Fair Trade premium in addition to a fair wage. This premium goes into a separate fund, which is used for socially responsible initiatives in the communities that supply the fruit. Recently, the premiums were used to build a village classroom and repair wells. Phil does not have a data-intensive impact measurement system but hopes to do more structured impact measurement as his business grows.
- It is a lot of work but he loves it. He runs a profitable business and provides economic benefit to communities in both places - jobs for people in Philadelphia and adding value to African farmers' harvests.
- He knew he had a lot to offer but surprises himself by running a successful business. He built on his strengths, has a natural inclination to work alone, and is willing to outsource what he doesn't know.
- He was lucky to find a trusted mentor who was honest with him and complemented his skill set - his dad, a businessman in his own right who supported Phil from the outset.
- Mavuno is consuming and takes up nearly all of his time. Work doesn't stop when you have a bad day.
- Being an entrepreneur can be extremely isolating and being a solo entrepreneur even more so because he can't share the joys, frustrations, decisions, with anyone who is as invested as he is.
- He didn't make a salary at first, and his current salary is what he made many years ago.
- Paperwork is abundant, necessary, and the least fun part of his job.
Mavuno is an example of a for-profit social enterprise that is doing things well - it sells a product that people like, makes a profit, and addresses a social issue. While rewarding, running this type of business is not always cool and exciting - the business/mission combination is not easily understood and it is hard to balance the two agendas. Phil's work ethic and ability to build on his strengths and recognize his weaknesses are instrumental in Mavuno's success. He believes in his business and has no regrets. His experiences have brought him to where he is now. Lessons that all of us can appreciate.