Leila Janah is on a mission to eradicate poverty, and she believes that giving dignified, steady, fair wage work is the most effective way to do just that. She left a high paying consulting job at the age of 25 to start a nonprofit called Samasource. You may have already seen her profiled in the New York Times, Fast Company, Wired, or Forbes, and her new book is Give Work: Reversing Poverty One Job at a Time.
Kruse: Samasource is a nonprofit but in 2015, you started a company called LXMI, which is a for-profit company, could you tell us about it?
Leila Janah: Absolutely. So, LXMI is an attempt to build the Samasource model in a new category, and the category of luxury skincare and beauty. Luxury is a really exciting industry to me because in general, there are much higher margins than in other industries, especially in luxury beauty and skincare where customers routinely pay hundreds of dollars for, say, a jar of skin cream. In my view, if you're paying that kind of money for a product that makes you more beautiful, it should also make the world more beautiful.
We should also be able to pay living wages in the supply chain, use healthy, organic plant-based ingredients, and not include toxic ingredients. Luxury gives you the benefit as a business model of having the margin to do good, and to do so without compromising investor returns. This is what's so exciting to me, is that I think you can actually build a profitable business, raise money from more traditional investors, and do the kind of good we're doing at Samasource by lifting people out of poverty, because these products can command higher price points.
I was really intrigued by that and I also think that in some ways, giving back is the new luxury. I think increasingly we're seeing that awareness, we're seeing brands like Toms, a number of brands that have a do-gooder element to them that are really taking off, especially among millennials. So, that was the impetus for creating LXMI, and the story of how it came to be is that I was in Northern Uganda. As an entrepreneur I love getting out there when I'm in Africa and meeting people and just letting those ideas flow.
I was in a local craft market looking at beadwork, which is really beautiful out there. I came across this incredible ingredient called nilotica. It is a very rare type of shea butter. It's actually a different subspecies from what most people have seen in commercial products here in the U.S. It only grows wild, at the source of the Nile River, in Northern Uganda, South Sudan, and parts of Ethiopia. It's a truly rare ingredient in that these trees that the nut grows on takes 20 years to mature.
I thought to myself, "What is more luxurious than something that comes from the wild, from a pristine environment, that is naturally organic, because no one can afford to put pesticides or fertilizers on these trees, that is hand-collected and hand-harvested, and cold-pressed?" I started using this butter that comes out of the cold pressing process, and fell in love with it and thought to myself, "This could be the basis for an entirely new brand and company" based on this idea of pure, wild ingredients that come from the world's most pristine places and, "We can scour the world for these ingredients and bring them to U.S. consumers."
The idea was these ingredients have to work, they have to be highly effective clinically, and they also have to create work for local women who do the harvesting in the supply chain. It's a “give work” model for skincare and personal care, that appeals to a luxury customer. We launched in October last year in 300 Sephora stores, and on QVC. We're the first fair trade in organic brand sold nationwide at Sephora, I think of it as a reflection of this trend towards more ethical and sustainable products.
Kruse: Right out of the gates you got Sephora. How'd you pull that off?
Janah: A lot of convincing. We walked them through our premise, I think we also really invested heavily in creating a beautiful brand. I think the other thing about this category is that for a long time, consumers have associated ‘natural’ or ‘good-for-you’ products with ugly packaging, and a little bit of a hippy marketing story. I wanted to package our products so that they looked as good as Chanel products. So we really invested in great packaging design, we used glass jars so they're BPA-free. We invested in a great design firm that did a lot of our marketing and branding work, and I think that's what got us the Sephora and the QVC deals.
Kruse: It is very difficult to raise money for nonprofits versus for profits. Because I'm assuming fundraising is one of the harder things to do for Samasource?
Janah: It's really tough, and we're now nine years old. For the first five or six years, it occupied so much of my time and my mental and emotional energy. I think the challenge in our industry, on the non-profit side in general, is that there's this huge disconnect between the way the grant cycles work and how these organizations operate. So, in order to win a big grant, you basically have to write up this big plan and tell the grant maker how you plan to spend the money five years down the line.
Literally like, "This is how many pencils we're going to buy in Year Five of this grant." Then, every time you change that—and that's obviously inevitable that that plan is going to change, especially if you're in a dynamic sector like technology in Silicon Valley—then you have to submit grant amendments, and negotiate with the funder to continue funding the program. This model is just so broken.
We need to be able to fund this kind of social and environmental work the same way that we fund startups, which is to say, "We trust the team, we trust the founder, they seem to have a good business model." We give them the cash, obviously we expect reporting on a quarterly or annual basis on outcomes, but we need to shift the way that grants and donations work and are so tied to a plan that has to change. I think it's one of the reasons the industry can be so frustrating and stagnant for dynamic entrepreneurs.
Kruse: If there was a young professional out there who wanted to stand out and get ahead in her career, what advice would you give her?
Janah: Well, the first thing that I learned is that especially in the social sector, whether you want to start a social enterprise or go and work for a non-profit, real business skills are in high demand. So, if you know how to read a P&L, if you know how to build an Excel financial model, if you know how to grow sales of a company, if you can work on finance or do bookkeeping, these are all real business skills that every organization needs.
A lot of people think if they go into social or environmental work that they need experience helping people or they need experience with the cause. What you need the most experience in is an actual business function and I think the best way to get that is to go and work—I know I hate to say this—but to go and work for a large company that has a good training program. I think that I basically got a free MBA when I did management consulting and for two years, was thrust into really difficult business situations that trial by fire made me learn how to have these skills.
Kruse: It gives you incredible credibility, whether you're raising money for a non-profit or looking for investors on your for-profit.
Janah: Absolutely, and you can still work for a great mission-driven company and build those skills, but it helps to be able to quantify the skills that you have. So, whenever I make a hire, I look at what were the results that that person achieved in their prior role? If they were working for a non-profit and they were in charge of fundraising or business development, how much additional capital did they actually bring in? How did they manage the pipeline? What training tools did they use? How did they hire good people?
If you're able to quantitatively build up your skillset so that you can prove that you can move the needle for an organization, that's what makes you hireable. It’s also what makes you a fundable entrepreneur.
Kruse: If you could place a phone call back to a younger version of yourself as you started to manage team members, what would be your leadership advice?
Janah: I was just writing this up. I think I kind of overshared in this New York Times interview a couple months ago, but I talked about having had a tough childhood and we're now learning that many entrepreneurs have had childhood adversity, and that what it builds on the one hand, is grit, which is a remarkably important skill for any entrepreneur. But on the other hand, it builds the sense of hyper-vigilance, that you're always a little bit paranoid that something's going to go wrong.
If you grew up in an environment where there was a lot of stress or abuse, or these sorts of challenges, you are wired to be a bit paranoid, and you're always waiting for the emergency to happen. While it can be good to be prepared—Andy Grove famously said, "Only the paranoid survive,"—it is not a healthy environment in which to grow a great team.
People in an early stage company need to feel comfortable taking risks, they need to feel trusted, they need to feel camaraderie, and that sort of sense of family and community I think is what gets people through the really tough early days in a startup where you can't pay them fairly, where you don't have any good benefits, where you don't have snacks in the lunchroom, or any of the perks that a bigger company would have.
It was a tough lesson for me that I could be hypervigilant maybe in my own head, or maybe when I thought long-term about the business, but I couldn't bring that stress to work, because it really would alter the dynamics of my team. Over time, I learned that making decisions from a calm, friendly, warm, and open position bonded my teammates to me and made them much more loyal to me as a boss, and to the company and our mission, than when I was operating from a place of, "Oh my God, if we don't get the sale, the company's going to go under," and of constant stress.
I think it lowered everyone's cortisol levels, and it's a very helpful reminder because it can be so stressful in the early days of a company, and it's not a skill. We don't really teach meditation to entrepreneurs. We don't teach tools to bring you back to a place of calm groundedness, and to me that was one of the most important leadership lessons I learned over the last decade.
Kruse: I'm always telling our listeners to get 1% better today. Give us a challenge, what do you want us to do today?
Janah: At this time, I think many of us have given up on our federal government to do the kinds of things we need to do to make the world better. A lot of us are deeply concerned about the environment and what's going to happen if we don't push better environmental policy, but we as consumers have tremendous power. Every second that a penny or a dollar leaves our bank account, we are voting with that money on what kind of a world we want to build. So, I think the most important thing that we can do as consumers today is to vote with our dollars, and choose companies and brands that make the world better.
Buy fair trade wherever possible. If you're buying produce at the market, buy organic, support local farmers, and realize that the money that you're spending every day is perhaps the most powerful vote you have in choosing a better world.