93: Social Startup Success: How the Best Nonprofits Launch, Scale Up, and Make a Difference with Kathleen Kelly Janus

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What's next? This is a question we're all having to ask and answer more frequently. I'm Jenny Blake, your host of the Pivot Podcast and author of the Only Move that Matters is your next one.

For show notes from this episode, visit pivotmethod.com podcast. If change is the only constant, then let's get better at it. Here we go.

Hello everybody. Welcome back to the Pivot Podcast. I am here today with my friend Kathleen Kelly Janis, who I met sitting next to on a Virgin America flight from San Francisco to New York City. When we met, Kathleen had just landed a book deal for her new book that's now out, Social Startup Success. In it she asks the question, how do social ventures scale to over $2 million? A clear benchmark, organizational sustainability. Kelly interviewed over 200 entrepreneurs and accumulated them in this amazing book. And now we'll share some of those nuggets with us on the podcast. A little bit about Kathleen. She's an attorney, an award winning social entrepreneur and a lecturer at Stanford University. She's a co founder of Spark, a nonprofit focused on building a community of young global citizens promoting gender equality. Kathleen, welcome to the show.

Thanks for having me, Jenny.

I can't tell you how many people I've met on Virgin America flights.

Well, we'll have to find other places to meet.

Tell us a little bit about this question of getting over what you call the revenue hump. And you've set $2 million as a clear benchmark for sustainability and I find that so interesting. Just this question of scale that you've tackled in this book.

Why is it that companies large and small hit revenue humps and what inspired you to seek out how they passed 2 million specifically?

Well, it's been a question that I've been super, super interested in because I personally have faced this revenue hump. When I was in my mid-20s, I co founded a small nonprofit called Spark, which engages young professionals, as you said, in gender equality issues. And in the beginning it was exciting. We were growing like a weed. We were doubling our revenue every few months and then At a certain point, just when we hit our stride, we hit a wall. We knew we were having an impact on our members, and we couldn't get the capital that we needed to grow the organization and to grow our impact. And so meantime, I, you know, like so many, I'm sure, solopreneurs or small companies, you're sitting there and you're like, banging your head up against the wal. And meanwhile, you're looking around and seeing all these companies that are exploding around you. You're like, what are they doing that I am not? What could I be doing differently? And so I kind of took that question to the nth degree and spent five years researching it, because I realized that this was a problem that so many organizations were facing. And very early on in my research, I realized that in fact, two thirds of nonprofits are $500,000 and below in revenue. And for many organizations, that's fine, that there is a place for mom and pop nonprofits, mom and pop businesses that are serving communities and doing really important work. But for many organizations, it's not enough. And they spend their time trying to stay alive as an organization when what they really need to be focusing on is serving the community and serving the beneficiaries to meet their pressing needs.

And so in the book, I talk about several strategies and trends that I saw the best nonprofits use to get ahead. And what was so exciting to me about my findings is that actually you don't need an expensive consultant, you don't need to have access to a lot of money to implement these strategies like leadership and measuring impact effectively and developing a funding model that any organization can do this well, and it's all about having the tools.

I love how you say in the book that you kept expecting these companies to say that success was driven by a truly remarkable idea or by the charisma of the founder, but that nobody did. It actually did come down to these very practical tactics.

Absolutely. And that's not to say that charisma or a good idea aren't important. You're not going to get off the ground if you can't get out in front of an audience and give a speech. But.

Speech making is a perfect example. You have to be able to get out there and tell a story well. And that is as much an art as it is a science, that there are strategies and tactics that you can use to draw your audience in to build a movement. And that's what I hope to extend to anyone who reads social startup success.

I want to get into some of the tactics later. But I'm curious if you think any part of getting over this $500,000 hump is psychological? Because the tactics in the book are very much about implementation. Do you think that, whether for founders or the organizational psychology as a whole, there is something that places some kind of wall or CE which is also getting in the way somehow of people truly scaling to that $2 million range?

Well, you really hit the heart of the question, Jenny, because I think the dirty little secret is that, yes, I've written Social Startup Success, and it has incredible strategies to help support organizations better. But organizations can only do so much. And the reality is that.

We live in a system that is broken, a philanthropic system that preferences people who have access to networks of funders, and that might be people with really great ideas, and that might be people who just have access to funders.

Is it insecurity? Is it external factors? Yes, absolutely, there are external factors. But I also, in the book, talk about ways to get over those insecurities. One of the examples in the book that I talk about is this woman, Gemma Boulos, who came from an immigrant family. And so for her, asking for money was the equivalent of begging. Her family had a lot of pride. And in the Filipino culture, you don't go around asking people for money. And so when she got into the nonprofit world, fundraising for her was like going against everything that she had been taught. And so she did have insecurities, and she had to get over those insecurities in order to be able to go out and realize that it wasn't about asking for money for herself. This was about giving people the opportunity to get involved in the movement. So I think it's a combination of both and that we both have to fix the system as well as find it within ourselves to go out there and put ourselves out there and learn how to be okay with failure and view failure as. As part of the learning process, getting us one step closer to the answer that we need to find.

I'm glad you brought up this fundraising question, because as I was reading your book, I thought, man, this is part of the reason that I'm not in a nonprofit or a situation.

How do you do, like, for people who would find fundraising? I don't know. There's something I resist about that so much, probably much like the founder that you just mentioned, where it just feels like such a tough mountain to climb and you're always having to ask for funds. And I guess if you believe in your cause, that's maybe. Maybe a big enough push to do it. But how do you have any other tactics for encouraging people, even if they're just doing Kickstarter or Indiegogo or GoFundMe of how to get over that resistance to fundraising? And in some ways, I think fundraising has lots of parallels to sales and marketing. So even if you're not fundraising through grants or donations, you still have to get out there and pitch whatever it is that you're creating.

Totally. So the weird thing in the nonprofit sector is that your beneficiaries, the people who are benefiting from your services or your customers, are different from the people paying for those services. So in the for profit sector, you have a natural market mechanism to weed out companies that aren't succeeding because customers just won't buy the those services. In the nonprofit sector, you have, you have to essentially run two, two separate businesses. You have to run the business of your programs, and then you have to go out and sell that vision to a set of donors. And you're right, people.

Have a big mental hump around fundraising. In fact, 81% of the organizations that I surveyed said that fundraising was their number one challenge as an organization. And I think it does have a lot to do with this idea of finding this challenge that people have with making the ask and asking people for money. And I do think that it is a huge mental shift that you need to make if you're going to be in the nonprofit sector. That in fact, it's not about.

Money, it's about kind of all of the.

Values that people place on money. And so I think we all, as.

As a society, have a tendency to equate money with power. And that by asking for money, we're asking people to take away some of their power. So we need to shift that dynamic. And only when we do shift that dynamic, will we be able to.

Actually go out and create partnerships around fundraising. Because really, even all the language that we use around fundraising is so weird, like grantors and grantees of organizations. That makes no sense. I mean, it's like the foundation is deciding who should be the beneficiary of their dollars when, you know, nonprofits have just as much to bring to the table as the donors who are giving away that money. So we need to start creating more of a partnership model as opposed to a hierarchy.

I love that distinction and the comments you made about power. So interesting. Just to get everybody on the same page, I would love if you could define what social startups are or what social entrepreneurship is and what makes growing those companies different when they're nonprofit versus companies that are for profit, such as, like, B Corps, that are socially oriented, but still corporations.

Yeah. So social entrepreneurs are anyone using innovation to support.

Social change. So the analogy that I like to use is that it's not just about giving a man a fish or even teaching a man to fish. It's about revolutionizing the fishing industry. We have, for many, many years, decades, been placing band aids on problems like homelessness and poverty. And those band aids have done nothing to solve the underlying wounds. We still have these problems. They're persistent and oftentimes increasing. And so what social entrepreneurs have done over the past couple of decades is changed the way that we view social change. That it's not about these band aids, it's about trying to change the systems that cause these problems so that we can prevent things like homelessness and global poverty in the first place. So it's a really, really exciting movement. And to get to your question about the difference between nonprofits for profits, I mean, what I see that's so exciting with my students at Stanford is that young people no longer see this kind of dichotomy of either you're in for profit business to make money, or you're in the nonprofit business to do good, that there are so many different levers for making social change, whether it's as a business doing good with maybe slightly less returns on investment, or. Or as a nonprofit or something in between, a hybrid organization, a business with a nonprofit arm. And so that's really exciting because we need all hands on deck to solve these massive social problems that we're facing. And there are so many more tools available now than there were even, just, say, 20 years ago. Thank you.

That's super helpful to hear the distinction. What are some of the biggest mistakes that you see social startups making?

Hmm, A lot of them.

Biggest one that I see is that social entrepreneurs, nonprofits, so often fall in love with their solutions as opposed to their problems.

So it's really not about your particular model for solving a social problem, like.

Criminal justice reform, for example. It's about really understanding, well, what are the underlying issues that are causing this problem and constantly testing those assumptions because different organizations are tackling these issues. And so the landscape may change and you may.

And politics change, and so you may find an in. I mean, the Women's March was a great example, is that, you know, there's been this opportunity to capitalize on.

The movement that has happened in the aftermath of the 2016 election. And so so many more women's. Women's organizations now need to test their assumptions about how they've operating and how, for example, the MeToo movement or the Women's March fits into their particular solution.

Yeah, that was. I remember a lot of friends talking about that, saying there was this mass accumulation of women and people supporting this cause in one place, and yet there was no structure to follow through afterward or even capture who was a part of the march and keep the momentum going.

Exactly. And so that is the onus on women's organizations not to be stagnant and continue operating in the very same way that they've always operated, but to be nimble and to think about, okay, how can we capitalize on this, to develop other campaigns to harness people's energy to focus on this moment? There's a great organization founded by a woman named Jamie Alexis Fowler called Empower Work, which she founded in the aftermath of the women's movement. It's kind of a hotline for anyone who's having challenges at work, whether it's sexual harassment or otherwise, to talk with someone outside the company to get advice. And she realized that with all of this awareness that was happening around workplace harassment, that there weren't really spaces for people to talk about it. And so she started the organization as an outlet just for that. So I think being really aware of social conditions and what's happening and not getting tied to a particular model is something that everyone, whether you're a nonprofit or a business, you just have to be aware of the system, not just your problem.

I really want to highlight what you said because it echoes something I interviewed, Bernadette Giwa, who's a brilliant thinker. She just wrote a book called Hunch about using intuition in business. And she also said one of the biggest mistakes people make is coming up with a solution that they think is going to be their next big idea, and then going around and trying to find a problem that fits. And instead it's look at where the problems are. And she recommends this exercise. If you even just sit in a coffee shop and watch what are the inefficiencies as a customer moves from the door to get their coffee and then out the door, what would you do differently as a way to observe problems first, then develop the solution? And it sounds like you're saying the same thing, which is, don't fall so in love with your idea or your model or any of it until you really understand the problem. And probably, I would imagine, when people or companies get off track, it's because they've lost sight of the problem. And the nuances of that problem or the.

Absolutely, absolutely. And there's frameworks that we can draw from business to keep the users engaged and maintain that feedback loop. Market based research or human centered design is one of the strategies that I talk about in the book, which basically just a user focused approach to constantly keep your beneficiaries, your customers, involved in the process. Because if you're not hearing from your customers, then especially in the nonprofit sector where they're not the ones paying for the services, you really don't have a feedback loop otherwise.

Just to clarify, if you're not hearing from the. The people that they're serving or from the beneficiaries. Sorry if I'm getting the lingo screwed up.

Both.

Okay.

Yeah, both, both. I mean, in the nonprofit sector, it's often the same person. So if you have a homeless advocacy program, you know, your homeless, the homeless people that you're serving are your end users and they're the beneficiaries and customers of your services. Okay.

And then that's different from also keeping your funders happy.

Exactly.

It's like two separate purchases.

Yeah, right.

And then even. Even the distinction of fundraising versus earned income I found very interesting. Like you said, it's kind of running two different businesses in one.

Totally. And I mean, for nonprofits, I think one of the things that's most important is to just stay true to your mission. I mean, there's a real tension between figuring out, can I make money off of this versus is this really the best possible solution?

So interesting. You mentioned causes and even I know Spark, the company you founded, was meant to connect people with causes from the perspective of, let's call them micro funders. So people who might be listening to this podcast sometimes, I think, and you have a call to action at the end of the book for people to get involved and donate or become part of these social startups and help in an individual way. So for the people who don't have thousands or hundreds of thousands of doll to contribute, sometimes it seems overwhelming about how to dedicate time and money. Which causes should they choose? Just sometimes it seems like there's. There's so many choices that maybe some people, including myself, I don't do enough. I don't do enough. And it's partly because of this block of just making the decision of.

Yes.

Where and when to give time and money.

Yes. Well, I'm so glad you asked this question because it is something I feel very, very passionate about. It's why I co founded Spark when we were just Coming out of school in our 20s, my co founders and I would give money to organizations. We'd stretch ourselves to give $250, which to us just felt like so much money at the time. And these organizations would practically pat us on the head and say, oh, isn't that cute? And then take our money, of course, but then never really contact us. It didn't feel very fulfilling as donors and the evidence shows that millennials want to get involved in the causes that they support, that it isn't just about giving money anymore. It used to be just about writing a check and be done. Now it's about rolling up your sleeves and thinking about what can you give. Also beyond money. So a few things. If I were in someone's shoes who was paralyzed and trying to figure out how to give back in a meaningful way, I would say start with thinking about what are the issues that you're passionate about, what keeps you up at night? And for everyone, it's going to be different. There's no right or wrong answer. And the good news is that there's great organizations supporting any number of issues. And so that is, that's one place to start. And then think about what are beyond money. What are the skills and talents that you want to give back to an organization or that you can give back to an organization. And those are two different things. I mean, you can use nonprofit work as a way to build your skills. And this is something that the evidence shows millennials are doing more and more that nonprofit work isn't just about.

Giving. It's also about getting. What can you gain from being involved in a nonprofit that might be resume building, like, for example, learning how to fundraise or learning how to give a pitch.

Those are skills that you can add to your resume that will be useful honestly for life. And then it's about testing organizations. And before you dive deep and get super involved and join a board of directors, try a couple of projects, get to know some staff in a nonprofit, and.

You know, see if there's an event that you can help volunteer at. Or, you know, is there a way that you can help with a slide deck or something for a presentation if you happen to be involved in marketing, and that's a skill that you have. So think about what you have to offer and then test it out before you get involved to see if it's the right fit. And then. And then ultimately listen to your gut. I like that hunch. It's really about doing the kind of work that fuels you and that makes you Feel good because if you're passionate, ultimately that's what is going to make you more effective as a donor, whether you're donating time or money or your skills or networks to an organization.

That is such great advice. I love how clearly you've laid it out. It could be a whole separate book in itself, or at least the Kindle Single they go for it. And it's great too, because as you were talking, I was mirroring it to your five tactics in the book for social startups. And I want to just share those so everyone listening can get the sneak peek. They are test ideas, measure impact, fund experimentation, lead collaboratively and tell compelling stories. If you had to pick one and you could give everybody listening, let's say, one assignment or thing to do in their own business or side hustle one of those five, which one would it be?

Oh, it's like asking me to choose my favorite baby.

That's how I feel about the pivot method too, which is very similar.

Well, I mean, I think what, what is relevant certainly to everybody in life is this concept of storytelling. And it's a short chapter at the end of the book, but it is absolutely the most important, I think, advice that I could give anyone who wants to do anything in life, which is that if you want to get people on with your vision, whether it's as a business owner or whether it's as a nonprofit or as a politician even, you need to be able to tell a good story. And I think we all have this tendency to listen to a good TED Talk or listen to a great political speech and think, wow, that person is just a natural. They're so good. And we think, oh, you know, that's when insecurity comes in. We talked about earlier, oh, I'll never be that good. I don't know how they do it. And when I got out there and talked with people, I realized that, sure, there are probably some people who are super good naturally at public speaking, but it comes from practice and it comes from just putting in the work to get it right. To understand who your audience is, to understand what the narrative is, to understand yourself and how you can personally connect with the audience and have that kind of self awareness.

A story that I love is that my friend Nadine Burkeris, who's the founder of the center for Youth Wellness, who's also coming out with a book this month called the Deepest well, has this amazing TED Talk with millions of views. And so of course she's one of these people that, you know, everybody thinks, wow, she's just a natural. She approaches storytelling like it's her Olympic sport.

She gets up every day and thinks about, you know, how she can be doing better. She practices the speeches that she gives, that TED Talk. She says that her husband could have literally given it for her by the time she gave it because she had practiced it so many times across the dining room table over the course of the six months that she was preparing for that talk. So I think there's no substitute for telling a good story and prioritizing that as a part of your mission, whether you're a business owner or a nonprofit leader.

I'm so glad that you emphasized practice as part of that, because it's true. From the outside, it looks like, oh, that person's just funnier or more charismatic. But someone.

They've used those jokes before.

Oh, absolutely. Someone once gave me advice that the speakers that appear the most casual on stage and the funniest and the most calm are the most rehearsed, which is not how it looks. And I can say I've just given now the same talk. I work with large organizations and I often come in and I give the same talk four times, and I say to the organizer, sorry, you're going to hear all the same jokes again. You know, and it's almost like doing stand up comedy as well. Stand up comedians are working their jokes all the time. And much like you say in the book about testing ideas, they look so casual on stage, like they're just riffing on a mic. But there is a total science behind throwing out bad ideas, refining the good ones, testing them, seeing what gets laughs.

Yes, 100%. I mean, there's that great story about Chris Rock, who has been, I mean, he has like, his little.

Audience that he uses and, you know, in a small town, nowhere that anyone. And so that's where he lets his jokes flop. Right? And that's. That's what all comedians do. They have their practice audiences before they go out and they give the big HBO special.

It's been so fun. I mentioned in the intro that you and I met sitting next to each other on a flight, just totally randomly. And I don't even remember what the conversation starter was, but it's been such a joy to see you go from book contract to writing the book and then finishing the book and then sending galleys and lining up all your marketing. And I noticed as I was preparing for this, in the acknowledgments, you thank your writers group. So I would love to hear. And also, by the way, for everyone listening, Kathleen has three kids, so you're raising three small kids. You are a Stanford professor. You're traveling, you're writing this book. I would love to hear about systems in your personal life, in general, and then please do share about your writers group and how it works.

Oh, my gosh, you're so good at systems, Jenny. I feel like this is like talking to the queen here. Someone. I saw a Facebook post yesterday saying, tell me the best way that we can figure out how to work through our to do list. And I was like, I use a Word document, and I have my to do list.

So, I mean, there is just no secret sauce to the equation that, you know, for me.

It'S not so much about balance, because there, you know, I think balance is a false. It's a myth that we can ever have balance. But it is about being present where I am.

In the role that I am in. And so when I'm with my kids, I'm with my kids. And when I'm out there talking about the book, look, I'm doing that. And so I think for me, what's been most important. Two things. One is building my portfolio of work as an entrepreneur has been fulfilling beyond anything I ever could have expected in life. I mean, how lucky are we that we don't have to be like our parents generation, where, you know, we get a job and we're in that job for 50 years, and then we retire, that we get to, like, really think about what we're passionate about, what a luxury that is. And so, you know, for me, I think writing a book alone wouldn't be fulfilling. It's, you know, it's fulfilling in harmony with all of the other things that I do to satisfy my soul personally, whether it's teaching at Stanford, whether it's being and serving on nonprofit boards and getting a pulse on the community that we're really supporting. So it's all of these things in harmony that make me really, really satisfied in life. And then back to your question about the writers group. I mean, for me, people ask me all the time, well, who are your mentors? And this is kind of a loaded question.

For a lot of people, like, how do I get a mentor? For me, my mentors, my best mentors are my peers.

And it's the same way, by the way. And I just was saying this in a speech yesterday. My friend tours, as I call them. Ooh, good one down. I mean, I definitely have mentors who've been super helpful, but the friend tours I have, we're hiring each other. We're referring gigs. I mean, that's an like all the time activity that supports my career that's been crucial.

So keep going 100% and finding not only. I mean, it's community, it's solidarity, it's ideas, it's validation so much from people who are in the struggle and going through it with you. Whether for me personally, it's other working moms that are also rock stars in their careers and trying to figure out how to be home by five to feed their kids dinner and give them a bath. And so creating spaces for those regular dinners with those girlfriends is really important to me. And the writers group is another great example is once a month we would get together and we would share a chapter.

And everyone would give comments and feedbacks and kind of talk about where they were with their work and we'd give each other ideas. And having that kind of intentionality around getting together regularly made it actually happen because otherwise I think we all get so busy that it can be hard to make it happen. So I can't recommend these kind of affinity groups enough. I have a CEO entrepreneurs women's group that I get together with every once in a while. My writers group. And then I have a couple of friends that I have regular dinner dates with on the calendar. And that's really what keeps me going.

I can really I having my friends and i3, two other friends and I, we used to have a recurring Friday night dinner. Then we started traveling and getting busier. So I found either making these groups, whether in person or over the phone having a recurring day and time is the best. Then there's just. It's frictionless otherwise. With this dinner group, we started at the end of one dinner. We would all pull out our phones and our calendar and schedule the next one. Because otherwise it gets so hard over email and someone has to remember.

Totally, totally. And then I have other friends who I just have an agreement that we can call each other anytime. So if I'm on my commute to Stanford and I can catch my friend in the car, in her car, then we'll have a great conversation while we commute. Love it.

Tell us more about how your writers group works. How often do you meet? How do you. Do you read each other's work or just cheer each other on? I'm so curious how that's going to be.

Yeah. So we all. It was. We kept it small. There were about five of us and that was a nice size because it gets hard to get everybody together. And the Other thing that was critical about the size is it made people really sign up and commit so people weren't flaking on the group. And then we would once a month set a date. Same thing at the end of every one, we would get our calendars out and set the next one. And each person was in charge of presenting some sort of work, whether it was an article they had coming up or an introduction to a new paperback edition of their book, or, you know, for a couple of us, it was our first book, so we were really working on the proposal stage. And none of us had similar backgrounds. I think that was kind of nice because it wasn't competitive. One person was writing on international relations, one person was writing on war theory, One person was writing on the art world. And so we actually were able to give each other perspectives that we wouldn't otherwise get from our little insular community of folks. And that's super jargony, like, don't say something like that because no one else is going to know what you mean.

And then we would just really cheer each other on and through the good times and the hard ones. When someone wasn't hearing back from a publisher, didn't get the deal that they were hoping for or what have you.

So were you reading full drafts of each other's work?

I usually chose something like a chapter or an article or just part of a draft. And then, yeah, we would give pretty detailed feedback. So that feedback was absolutely critical to me at times when I needed a little push to get through.

And was the feedback happening over the phone or would you respond in the draft or in writing? Over email?

We'd bring our comments to the dinner and to the dinner.

Great.

Yeah. And so we'd meet for dinner, everyone go around and talk about where they were with their project and get some advice. And then one person would be in charge of presenting and we would give feedback on the spot. So it was really. It was fun, too, to think through. Like, how could this be better? How could you make it more approachable for people? What are some of the things that might be missing from this argument?

I love it. Sounds so great. There's another. Okay, these are all articles for your book to go with your book sharing. You've set up these groups, I think would be so interesting for people.

Good idea. Yeah.

Awesome. Kathleen, thank you so much. It's been so fun, like I said, not just to get to dive into your book today, but to watch the whole journey of this book being born. So congratulations. Where can people find you if they want to keep in touch?

Well, you can find me at my website kathleen janice.com or of course I'm active on Twitter and you can add me into the conversation at kkelly Janis Amazing.

And if you're running anything in the realm of a social startup, be sure to check out Social Startup Success how the Best Nonprofits Launch, Scale up and Make a Difference. Thanks again Kathleen.

Thanks Jenny.

Thanks so much for listening to this episode of the Pivot podcast. Make sure you don't miss an episode or my insider tips and templates by signing up for Pivot List, a curated twice monthly newsletter where I share the inside scoop on what I'm reading, watching, listening to and the latest tools I'm geeking out on. Sign up@pivotmethod.com pivotlist get show notes from this episode at Pivot Method.

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Remember, build first, then your courage will follow. Hasn't it always.