Quantifying Social Impact for Investors, with Catherine Griffin of Impact.able Analytics

Welcome everybody who is starting to join us right now. I see a few attendees popping in there. Hello everyone, my name is Dustin Betz. I'm the content editor for Founder Insights. That's the blog and newsletter for the Founder Institute. The Founder Institute is the world's largest pre-seed startup accelerator. We've helped launch over 4,000 companies across 185 cities on all 6 continents. If you're interested in learning more about the Founder Institute and our Pre-Seed Accelerator, we're currently enrolling for cohorts across 70 cities and regions around the world, and you can see that complete list of enrolling cities at fi.co/enrolling. Without further ado, the topic that we're here to talk about today is impact startups. These are companies that solve social or environmental problems. You know, today consumers are demanding more from companies, and so are employees. They want more than just profits. They want, you know, peace, people and planet. And this is really important because there are so many big problems in the world that need solutions, and entrepreneurs are problem solvers by nature. And so we kind of really believe in the power of impact startups to make a difference in the world. And here to speak to us about this topic is Catherine Griffin. She's the founder of Impactable Analytics, the website socialimpactprojection.org. She's also the managing director at Good Company Ventures and an adjunct professor at Temple Temple University. For more kind of on this topic, we'll share this link in the follow-up email that you'll receive as well, but her recent 2019 publication in Impact Philly and in Technically was called Social Impact for the Financial World: The New Impact Modeling Approach That Will Change the Way You Think About Social Impact, and it's a really great article for anybody who's interested in this topic. Catherine encourages you to please reach out to her with any and all questions that you have about impact she's going to share her email at the end of the presentation here, you know, in terms of applying what we're discussing here today to your company specifically. Catherine, thanks so much for joining us today.

Dustin, thank you so much for having me, and thank you for everyone who's joining today. It is such a pleasure to be here with all of you. Before we get started, I want to invite you all to engage. Kindly share your questions, your comments, your thoughts, your feedback in the chat section. I'd love for this to be, you know, a bit more interactive. I'd love to, you know, hear how this material and content lands with you. Please don't be shy, and we'll get to as many as we can during the Q&A. So briefly, this is designed to offer an introduction to Impactable, our orientation to the larger social impact space, and the approach we've designed both in theory and practice to actually quantify it. There are other ways of thinking about social impact and other approaches to quantifying it. We don't claim to be the one and only. But Impactable offers an approach designed uniquely for early-stage founders and their investors. And we believe that generating this impact data is absolutely critical to moving the impact space and impact investing space forward. At the end of today's session, you'll have a framework for how to think about social impact and really clear steps for building out an impact model of your own. Before we dive into that, I want to take a moment to point out what may be obvious, and perhaps you've heard this several times before, but I think it's worth saying nonetheless. The world needs social innovation, I think, now more than ever. We're crossing paths at a really unique time when decision makers at all levels—investors, municipalities, consumers, homeowners, Folks are unusually open, questioning how to move forward from this crisis, how to address the structural inequities that have been exposed, how to keep themselves and their families safe, who to believe, what the future will look like. And as changemakers, you have a unique opportunity to leverage this crisis, to capitalize on this sort of collective pause, and touch people with new ideas. And so I'm here to help you tell your story with real gravitas, whether that's about your own company, one you're a part of, whether that's about where you choose to invest your time in innovation and innovative energy. I'm here to talk about driving all of these resources—financial, human, creative—towards solutions that can meaningfully and optimally impact vulnerable populations and strained resources using data and rigorous analytics. I'm going to go ahead and share my screen.

Awesome. Please don't be shy with your questions, everyone, as we get started here. We have a producer who's going to be collecting your questions. So please, as you have them, feel free to add them. To the chat.

Okay, so here's the rundown for today's session. I'd like to offer a little bit of background on me and where this approach originated, offer a little bit of theory on what social impact is. If we're gonna quantify it, we need to be on the same page. Contextualize it a little bit with why it matters, and then dive into the, the sort of meat of this, which is the methodology and the analytics that it can generate, as well as some case studies to illustrate, you know, how it's applied in practice. So I've managed, as Dustin referenced, Good Company Ventures since 2013. It was founded in 2009. It's an accelerator for early-stage social entrepreneurs. We've worked with hundreds of founders who have gone on to raise tens of millions in capital from top-tier VC firms like Andreessen Horowitz and First Round Capital. As Dustin knows, we've built these sort of massive innovation consortiums with folks like Bloomberg Philanthropies, Wharton Social Impact Initiative, 100 Resilient Cities, the Obama administration, all geared towards mobilizing and leveraging technology to solve social and environmental challenges. In 2013, we won a Bloomberg Mayors Challenge Award to focus on public safety initiatives. I have some case studies at the end of the presentation that emerged out of that work. And then in 2016, we, we mounted a program with the Obama administration called Climate Ventures 2.0. And again, worked with hundreds of partners on the investment side, on the industry side, and this one was all around mobilizing new innovation to address climate adaptation issues, particularly with food and water systems. And, you know, over the course of this time, we really got into the weeds with these founders and grappled with a lot of the challenges that they grapple with. You know, so many early-stage companies, I think, are today founded based off of, you know, aspirations for impact, a real fundamental desire to pursue a certain mission. But what we see often is that there's no way for founders to understand whether or to what degree that mission is actually becoming a reality, to manage for it, to optimize for it. And ultimately to articulate it to stakeholders who matter, like investors and customers and partners. And, you know, there was just this general understanding of impact creation and a sort of expectation that those stakeholders also understand the impact that's created. And that expectation of understanding and assumption of impact can come with real risks of leaving opportunity on the table. And we're gonna talk more about that later on. But fundamentally, we see generating impact data and impact analytics as a way to capture real value and articulate it in a meaningful and effective way to engage stakeholders. So before we get into how to measure social impact, here is how we think about what social impact is. So just to sort of orient ourselves, this is a quote from Deloitte, and they defined a social enterprise. They think about it as an organization whose mission combines both revenue growth and profit-making with a need to respect and support environment and stakeholders. Here's how we translate that. Entrepreneurs solve massive problems. By solving these problems, they create massive value. Entrepreneurs figure out how to capture— how to create and capture that value. But they can only monetize a portion of that value. And so social impact we think of as this unmonetized external value. And you can read a lot more about this sort of fundamental thesis in the article that Dustin mentioned. This is what that looks like, we think. For an individual company. So your financial model represents your sales projections over a given term and your revenue— pursuant revenue projections. That's your financial model, and that values the internal value that you create. The business model works if it captures sufficient revenue to fund operations, i.e., make a profit, and reward investors. By integrating external value, a business model works if it also creates leverage for impact, maximizing external value creation in the form of carbon emissions or new income for low-income populations. If it creates this external value, and its revenue serves as a lever. And so by capturing this value, we now have all kinds of new insights about a business. We can now see the relationship between revenue growth and impact growth. Maybe it's direct, maybe it's not. We can see the relationship between internal value and external value. And with this data on the table, now you as a founder are able to manage it and optimize it. Do you want to maximize for revenue, maximize for impact? Do you want to maximize for both? You can only make that decision and manage accordingly if you have the data. And so this is how we think about impact. And this is why it's important. The same report from Deloitte, happy to share it afterwards, says that it's not a matter of altruism. It's about maintaining your reputation. It's about attracting, retaining, and engaging talent. This is incredibly important. Graduates of Wharton, local to Philly where I am, are not taking jobs with organizations that don't have a sense of mission. And we see companies, the leading companies, and I'll show you examples in a second, are sharing their impact KPIs as a way to build loyalty and community among their consumer base, which is increasingly millennial, which is increasingly globally minded. That same report says that 86% of millennials, in fact, believe business success should, should be measured in more than just financial performance and are actually looking for those impact KPIs to inform their purchasing decisions. These are some leading companies that you surely know about, and on their website, they tell their story. And their impact story consists of data points. Pounds of trash removed per item sold, gallons of water saved, contaminants prevented from entering, you know, the water system, carbon emission reductions. These data points are known, and they're not a matter of internal sort of management. This is, this is about building a brand and sort of reporting out on, on your sense of responsibility, and consumers are demanding this increasingly. But beyond the consumer base, we're seeing a massive movement of capital towards impact. The global impact investing market is growing rapidly year over year. In 2019, the Global Impact Investing Network estimated that there was $502 billion of impact investing actively being invested. And in 2020, that jumped to $715 billion, which, you know, relative to all assets under management is relatively nominal, but it's growing very quickly. And a lot of this is accessible to the early-stage market through new forms of grantmaking and investment. I'm happy to talk more about that. But we're seeing the largest transfer of wealth in history. It's estimated at $30 trillion of capital as millennials are taking over their parents' fortunes. And those millennials are demanding that that capital be invested and managed for impact. And they wanna see those data points. And among those fund managers who are managing capital, 100% of them consider impact metrics important. And so we're gonna talk today about how to actually show that your company is delivering a technology that can address social and environmental challenges within a business model that has great potential for scale and make a real argument for stakeholders of all kinds to help build and invest in your solution. And so our approach to modeling impact has a couple fundamental components to it that are unique to other approaches for managing impact. I'm sure many of you are familiar with B certification. It's quite popular. There are other approaches like it. Many of these are geared towards later-stage companies. B certification in particular evaluates a company's operational footprint, so its supply chain, its hiring practices, its recycling policy, you know, where its headquarters are located. These are great and they're very important. Many times they don't apply to startup companies that are operating out of, you know, coworking spaces and putting their trash in the recycling bin at, you know, WeWork. They're also strictly retrospective. So these don't articulate impact potential. They aren't forward-looking. And obviously startup companies need to enroll and engage investors in particular around their possibility and potential for impact, among others. Among other value propositions. And so our approach includes a stable core logic model, which is essentially a stable formula with variable inputs. So this is dynamic. We call out variable inputs that can change as you grow, as your understanding of your market and the growth of your company changes and evolves as you collect primary impact data. This is designed to grow as you grow. That's why we call this a social impact model. These are not static analytics. We think very much of social impact modeling the same way that you already think of financial modeling. You put numbers down on paper based off of research, comparables, industry standards, what you know about your market. And you keep moving. And as you start to collect more information about your market and your customers, you refine those numbers over time. It needs to be dynamic. And so this is the same approach for impact. So here is our methodology. This is really the how behind, you know, what we do. I'm going to talk about this at a theoretical level. It's going to be very sort of straightforward and clear in theory. And then we're going to run through a couple of case studies to show you how this applies in practice. Okay, so there are 3 core components to this. We call them definition, attribution, and valuation. Definition is quite straightforward. We simply define your impact metrics. What are the measurable expressions of your impact? And how do they align with global standards, like the Sustainable Development Goals, namely? You know, so sometimes this is quite straightforward, you know, kilograms or tons of carbon abated. Sometimes it's not so straightforward. Sometimes it's about, you know, in the case of wearable technology, we had a company that was claiming reduced time to optimal care. By collecting real-time biometric data. That's not necessarily obvious. So we take a moment and we figure out what your key metrics are and get aligned with global standards so that we're all talking about the same thing, we're all measuring the same thing. Then in the second step, and I'll I'll show you this a bit more. We determine how and to what degree revenue drives each impact claim. And then in the third step, we call valuation, we assign an economic value to each impact unit using third-party research. And each of these pieces gives us inputs that allow us to generate really interesting analytics that I'm going to show you. So here is more on that first step. Again, it's pretty straightforward. Here is attribution step. So we first need to break down a business model and identify impact at a unit level. Sometimes that unit is a widget. It's a product. Sometimes that's a user or a prison or a school. It's a unit of growth. For the purposes of illustration, here is a case of a company that was essentially collecting trash in Haiti where it's an enormous problem. Breaking it down into plastic flake and spinning thread to create fabric and selling backpacks direct to consumer made up of a certain percentage of trash. And in this case, what we do is we relate one backpack to their impact unit, which was pounds of trash diverted from landfill. And so we know that if one backpack has is, you know, 4 pounds of trash and this company expects to sell 10 backpacks over the next month, then we know that they're going to divert 40 pounds of trash from landfill. And so 2 things to point out here in terms of your core logic model. One is that you can change this relationship. This unit-level relationship between backpack and trash. You can also, though, change the relationship or change your growth estimates over time. So the 1-to-4 ratio might change, and then estimates around, you know, number of backpacks you might change— sell over a given period of time can also change. And so these are the variable inputs that we're talking about building into your model. And, you know, maybe you find out more information about how much trash you collect, or maybe you find out that you can actually sell 20 backpacks over a month. This approach gives you those sort of buckets to change and refine over time. This is the, the third piece. This is where we look at economic implications of impact, which is again sometimes straightforward and sometimes not so much. This is where we look at new value created or costs avoided as a result of impact. So the social cost of carbon, for example, is known. Lots of reports have been issued about it. If you are generating an increase in revenue, as I'll show you— I'm sorry, an increase in income for certain populations, as I'll illustrate in a case study, you know, that is new value that's created. For certain populations. That is known and it's discrete. So this is the way that we, we can differentiate between a company that might serve 2 people, but at a very, very deep level doing hard and, you know, grueling, important work versus a company that might serve thousands or millions of people, but at a much more superficial level. Versus a company that actually maximizes for both, right? So from the second piece, we get impact outputs or KPIs, the number of pounds of trash diverted from landfill. Here we can account for the implications of that, the external value, the size of the impact value created, if that makes sense. And I'll show you more examples. So as a result of these 3 steps, we can generate really interesting analytics. Here are some examples. I'll show you more in a second. But your social impact projection is essentially your valuation per pound or ton of trash multiplied by the number of pounds or tons of trash diverted from the landfill. It's a simple calculation, and it can be done both per metric and in aggregate. And essentially, it represents the total impact value that your company can create over a given term based off of your sales projections. And once you have that dollar value, you can then divide it by your revenue projections over the same period to get a revenue multiple. and you can divide it by your capital requirements over that same period to get a capital multiple. So you can go to investors and say, for every dollar of funding you invest or grant my company, I can multiply that by 20x or 200x or 2,000x in impact value creation, and here's how, and here's according to what. We think that's really powerful. Here are some of the data points that are generated. Of course, you get, you know, your impact outcomes, but you can talk about impact outcomes per metric, per widget sold. You know, you can talk about the totals or how these break down in a lot of different ways. You can talk about them by SDG, over different, you know, periods of time. This is really dynamic. And so let me show you some case studies. So here is an example of a company that was part of the public safety project I mentioned that won the Blame Bloomberg Mayors Challenge Award. This company has, I believe, now closed a Series B. They've gone on to do absolutely incredible things. And, you know, brief history. The founder came out of Stanford, worked at, I think, Facebook, and wanted to essentially use his put his sort of expertise, his UX expertise for good. And he went through the process of applying for food stamps and found it to just be a horrible user experience. And so he decided to code a mobile app that enabled eligible but unenrolled SNAP or food stamp beneficiaries to enroll and manage their, their benefits. And so we helped him quantify that over the average 10-month tenure of a beneficiary, he was able to unlock an average of $1,170 in food budget. That level of granularity he didn't have before. It was sort of, we're going to enroll folks who need access to food stamps, right? And that is a good thing. And indeed it is. Nobody's going to argue with him. Now we can actually put some numbers down around it. What happens for local economies now that that $1,100, $1,200 is in, uh, the thousands of people's pockets. Um, we found that there is a $2,000 economic stimulus per beneficiary, and that over 5 years, based off of the number of people, uh, this company expects to sell to, they'll be able to unlock nearly $2 million $1.2 billion in new benefits, generating a 58.6x revenue multiplier. So for every dollar of internal revenue that Propel generates, they can multiply that by 58.6x in new value creation, in this case, in the form of new food budget in folks' pockets. Here is actually another example that came out of the same program. This time the company was selling tablet technology into prison systems that was preloaded with educational content like GED completion, vocational training, anger management training, And the theory was, when he joined us, he had a belief again in this impact that by better preparing inmates for release, they will be less likely to return to prison. It's a thesis. And he joined us and we applied this methodology and we sort of unpacked it a little bit. We looked at what the research says. Around the efficacy of this type of content to actually reduce the likelihood of a returning citizen to recidivate, to return to prison over a 3-year period. And the research says that based off of his sales projections— so what we did here, let me back up a little bit, is we identified the unit of growth as a prison. And so we looked at, on a per-prison basis, how many average inmates there are at, you know, the given prison that's in their sort of target market, how many of those are going to be likely active users, of those, how many are poised to be released over the next 5 years, and then of those, what the research says about this educational content's ability to reduce the likelihood of returning to prison. And so we really kind of broke it down and applying the research found that 43,290 inmates wouldn't return to prison based off of the research within the first 3 years. These are projections. This is a way to have a conversation with investors and stakeholders around your understanding of your technology and its ability to generate the impact that you think it is. And saying to, you know, a warden at a prison, we think this kind of technology can reduce recidivism, versus saying this is what the research says and you know, at your prison, you have 5,000 prisoners. We think this is the number of prisoners who now will be better prepared to return to, you know, citizen life. That's a different kind of a conversation. And it equips you with the data points you need to make a really compelling argument. In terms of valuation, for the sake of illustration, what we looked at here was cost savings for the state. Turns out it's incredibly expensive every time an inmate is released and returns to prison within 3 years. Um, and so we totaled all of those cost savings and generated a revenue multiplier and a capital multiplier for this company. They've actually now purchased a communications platform, a phone company, and have also closed Series B investment from traditional market-rate VCs. I think I need to stop there. We're at 1:35, and I want to make sure that we get to some questions. I have some other case studies that I can reference if they're helpful, but really want to hear from you guys about about, you know, your companies and what you're doing and make sure that I've communicated our approach as clearly as possible. So, Dustin, let me turn it back over to you. Awesome.

Thank you so much, Katherine. That was a really fantastic presentation. I think for anybody who has maybe just heard maybe the term social impact as related to startups, but not thought about quantifying impact, and yet that's a really, really robust way for them to start thinking about the methodology of how to do that. So yes, please don't be shy as you have questions. If you haven't shared them already, please put them in the chat. We're here to answer your questions. I guess I'll kick it off. We have a few audience questions here, but I want to kind of go back to the basic unit economics that you, you talked about for social impact in this on unmonetized external value. You mentioned briefly, like, using the UN SDGs. They can fit certainly a lot of, you know, units for measuring impact. Are there other ones, or I guess frameworks out there, that you want to just highlight beyond the sub-goals of the 17 UN Sustainable Development Goals that are just good for people to take a look at who are thinking about you know, how to frame their impact. Yeah, absolutely.

So I would say that the SDGs are really becoming the most commonly cited and referenced. But yes, there are absolutely others. So IRIS+ is another platform, and they have, they have a core, core data set, core metrics. It's, it's worth being familiar with. They have a whole catalog with sort of, you know, codes for identifiers for different metrics to be considering, kind of a high level of granularity, but they are always building out their resource base and evidence bases. And so definitely encourage folks to be familiar with that. The Impact Management Project is another globally recognized thought leader when it comes to IMM, Impact Measurement and Management. Most of their guidelines are geared towards the investor space, but for a founder, it sort of lays out all of the components of, you know, thinking about your theory of change. So, you know, that's another good one. They, they talk about, you know, impact risk, they talk about impact baselines and thresholds, they talk about the different dimensions to consider quantifying. So also another good one to know about, might be a little overwhelming for the early-stage founder, but in terms of sort of orientation to the global community, Definitely another good one to know. And the last one I want to mention is Social Value International, which is based in the UK and has been around a while. And they've done a lot in terms of social return on investment. They have an excellent database of the valuations we talked about. It's still in development, as this whole space is, but an excellent resource if you do indeed want to try to quantify your impact from a financial or economic standpoint. Awesome.

Thanks so much. Yeah, those are all really great resources, and we will be sure to check them out for when we recap this and share this video out for especially founders who are in that first definition stage and just kind of thinking about how they're going to define their impact. I want to jump here to get to our audience questions. First, Matthew asks about, would love to hear experience about, he says, opportunity zones and food deserts. Let's take opportunity zones. Do you have any kind of thoughts on that? Does that play into any impact quantification that you've done thinking about these special economic opportunity zones?

Yeah, we have. You know, so what it ultimately boils down to, I think, is the metrics that are emerging. You know, new job creation, you know, social determinants of health and well-being that are emerging out of Opportunity Zones. You know, and in terms of food deserts, we're working with a company right now that's actually a nonprofit, but they have a really interesting model, and they're delivering meals, vegan meals, to communities that have been hardest hit by COVID, which are often food deserts. And so, here we're looking at unique metrics. I mean, some of them are very sort of straightforward, like, you know, access, access to fruits and vegetables. You know, what percent of a certain zip code has access to fruits and vegetables on a daily basis, right? We get really granular like that. In this case, we're also considering key nutrients in their diet. What percentage of a population in this zip code consumes, you know, this amount of protein every day? And, you know, that sort of baseline, we need to draw from research. Then, when we look at this initiative, we're looking at how much protein is actually being delivered, and we calculate that delta. That is the impact. So, happy to talk more about a particular scenario or situation, but really getting clear on what those metrics are, whether it's in a food desert or an opportunity zone, that, matter most. Yeah, perfect, perfect.

Amanda asks, and this is a question a bit outside the scope of the presentation, but I think it's a good one. Do you have any preferred data analytics or data visualization tools that you might use to communicate visually data management?

You know, Airtable is a good one. Tableau is a good one. Google Sheets is a good one. You know, at this point, point, assuming most of the attendees here are early-stage founders, the simple, the better. In terms of data visualization, don't have a preferred tool. I think it's really important to get the the inputs accurate before thinking about actually visualizing it.

Yeah. Yeah, perfect, perfect. So Scott, or de Scott, asks about any thoughts on social impact and crowdfunding. Is there a social impact crowd space out there that you know of, or that you should be aware of?

Um, that's an interesting question. Um, I am familiar, uh, with sort of crowdfunding data platforms. Um, I'm working with a company called Share Yourself right now, um, and this is an interesting sort of crowdfunding platform. I mean, I've definitely come across them and I'm happy to circle back with you off the top of my head. There aren't too many. I'm not sure though that not using Kickstarter or a more mainstream crowdfunding platform wouldn't be the right way to go. You know, I think if you convey your value proposition and if you have some of these data points, I think there's no reason why a more mainstream platform would be less effective for a social impact company. I would keep an open mind.

Yeah, I kind of want to ask a question just dovetailing off of that, which is I guess the more quote-unquote mainstream of the crowdfunding spaces. And this is kind of a general question about just your vision for impact, and you'd mentioned about millennials and consumers demanding more from these companies. This global impact investing market, that was a super impressive metric that it's now $715 billion up from just $500 billion last year. I mean, do you see the growth of impact continuing at this pace? And, you know, if so, I guess, is it totally mainstream? Is there— should all founders be thinking about some kind of impact angle or something they can build into their business?

That's such a great question, Dustin, and I do not see this contracting anytime soon. I think, if anything, the rate of growth is only going to accelerate. I think COVID and what's going on with the social justice space is accelerating it even faster. I think what's going on now is forcing a lot of innovation to happen more quickly, and I'm definitely seeing that reflected in conversations with investors and other founders as well. In terms of the millennial population, what I'm seeing is that lots of founders are founding companies that have impact implications that they aren't even aware about. You know, they see an inefficiency, a resource inefficiency, and they're solving for it. They live in an urban space and they want plants in their apartment, right? They, they aren't necessarily you know, driven by that sense of mission, but it's there nonetheless. And, you know, what I hope to convey from this presentation is that that is value, and capturing that value is important and is powerful in terms of its ability to engage stakeholders. So I think this is becoming more mainstream. I don't think it is necessarily mainstream, but we work with a lot of accelerator programs and ones that don't necessarily cater to the social impact space. And without exception, I see companies now that would appeal to venture tech investors, you know, and they're addressing vulnerable populations and/or resource constraints. And the data that we generate isn't about these sort of like nice-to-haves, like this is extra money we're gonna donate because we're good people. A lot of times these data points speak directly to a company's ROI, directly to the sort of needs and, and values and, you know, motivations for engagement among customers and partners. And so, you know, I think this is only going to become more central. It's absolutely a requirement if you're appealing to the impact space directly, impact investors or accelerators. But even outside of that, it's becoming— there's a lot more awareness that I'm finding. So it's an exciting time to be part of this. Absolutely.

Yeah, we have a lot of questions kind of in the chat that are sort of about these, I would say, maybe edge cases of impact where it's just not super, super clear, you know, maybe what the impact is. And so I'm going to try to blend some different questions together here from Ramesh and Luciano and Misha. So the question from Misha is about how do you quantify the value of evidence-based policymaking? They're asking specifically about perspective of like rainforest conservation. So I don't know if this is like a company exactly or how it scales, but any kind of thoughts on this quantifying evidence-based policymaking question?

Yeah. So this is a bit less direct, um, and the work that we do is focused on first-order impact. So, um, policy typically addresses a theory of change. A theory of change, uh, has, um, sort of a whole process to it. There are You know, specific outputs that generate outcomes that lead to systemic change over time. And we, by quantifying impact, we are looking at those outputs, those things that are measurable and direct results of a certain intervention. And so if we're looking at, you know, policy level, there are ways we could sort of tease out impact metrics. For example, you know, let's take a small sort of municipality-level policy. Probably rainforest policy is going to be at a federal level, which adds multiple degrees of difficulty to this, but can be done. It's just going to probably be more attenuated. At the, at a local level, for example, you could look at how many businesses or rainforests, you know, units are affected by the given policy. And what does the research say about the likelihood of those units, those rainforests, those businesses of complying with a given regulation? Let's assume 50% of them comply with the regulation. What then happens as a result? What do they do as a result? Um, are they, um, cutting down fewer trees? If so, how many? Um, over what period of time? Like, really figuring out what the numbers are, even if they're assumption-driven. Certainly pulling from research where research is available, from, you know, similar policies and their efficacies. But even in the absence of that, you know, we assume 50% will comply. We assume each one of those, you know, 50% manages 100 acres of forest containing, you know, 1,000 trees per acre. You know, like really kind of breaking that down and then thinking through, okay, What does it mean that a company complies with this new policy?

Perfect. I think that's great because it's very similar kind of approach, you know, for other evidence-based policymakers maybe on the call. It's like it's getting more and more granular, even if there's assumptions involved, like really driving down to get to something measurable, even if there are assumptions built in. That's great. I want to get to a question from Yutaro because it's like very specific and it's kind of a longer one. So I'm just going to read it here. But it's about partnering with NGOs. I thought it would be a good idea to partner with an NGO that measures some of its impact metrics as part of their operation, since monitoring and evaluation can be expensive for startups to do. And he says, for instance, I'm providing nutritious meal kits to schools in Africa, but measuring dietary diversity and nutritional status is time-consuming and expensive. And would you say, is collaboration with an NGO something you have done, and do you recommend doing that?

Absolutely. Collaboration with an NGO can offer all kinds of benefits, not the least of which, you know, a distribution network and domain expertise, which has all kinds of additional, you know, implications and benefits. I think you can draw from those metrics and data points. Absolutely. I wouldn't depend on them. I wouldn't rely on them. I would also consider your business's impact, which is, yes, its ability to deliver, you know, those key nutrients, no question. But it's also about you know, the number of kids in schools were now accessing meals because of your thing. And, you know, anybody who supports you, the NGO included, investors included, are going to want to know that. Why should they support you instead of another organization? And it's because you reach kids in this particular place, because you have this unique NGO partnership, or, you know, your meals are uniquely nutritious, or you are able to deliver your thing via this super cool app, or whatever. So I think that that's what I hear about the data and impact metrics that the NGO is delivering. Absolutely brilliant. But it may not tell the full story.

Mm-hmm. And he actually asks a follow-up question, which is, just to clarify, and this might be a role for somebody at your company, so that a founder would hire an impact person to do research and quantify the social impact for their company or their contribution then, you know, through that, that NGO. I mean, does that make sense? Is that— if somebody is bringing on somebody who's like an impact officer, appropriate for an early-stage company, or?

Definitely not. I would not encourage you to do that. I— this approach, this approach is designed to be streamlined, meaning it can be done in a couple of weeks and it can be, you know, it's dynamic, it grows and evolves as you grow. That's appropriate for an early-stage company. Yeah, you know, when you are raising, you know, millions in capital and you're well-resourced and you're up and running, you know, you might want to hire that person. But this is a job that as a founder you should do. You know, if you have a COO, they should do. If you have a marketing person, they should do. I definitely would not encourage spending precious resources at an early stage on hiring someone specifically for this. If you do, you're, I think, a bit too in the weeds. You want to maintain perspective. I think.

Yeah, we only have a couple minutes left, so I want to get to at least one more question here. Charles asks about, you know, how do you suggest companies blend their pitch, I guess, between what he's calling their social mandate and then on the other side how they make money, and, and doing it seamlessly when they might be presenting these pitches to different kinds of players that they're targeting. Any kind of advice on positioning impact as part of the the scope of what the rest of the company does?

Yeah, absolutely. That's a great question. So what we see, you know, is really upfront when there's that initial sort of problem framing, you know, this is often addressed, you know, what is the social or environmental challenge and why is this an opportunity? What, you know, I would call it out, and what I see as most effective is when this is called out upfront, and then, you know, once you get into revenue projections, we see impact projections following that. We often see at least one slide focused specifically on impact data. Sometimes companies just like to kind of call out their alignment with SDGs. A lot of times we see companies talking about their impact multiple and their revenue multiple, as well as their KPIs. But again, I don't see these as sort of bifurcated. I don't see them as like separate and, you know, not influencing one another. You know, it, It's about value creation, and absolutely, you need to demonstrate financial returns in order for a pitch to be effective. I think speaking to, you know, addressing a problem effectively and creating value, Investors know to take especially early-stage pitches with a grain of salt. Your numbers are going to be wrong. They are. Investors wanna see if you can create value, if you can create meaningful value and solve a real problem. And your pitch should convey that, right? And this is just another way to, I think, tell that story.

Yeah, I love that. I mean, just framing it as part of the problem solution framework, it makes a lot of sense because it's— for most companies, it's not so tangential to what they're doing. It is tied somewhat in a way that will scale in some way, you know, with the overall success of the company. Um, so wonderful. Thank you for that answer. Any final closing thoughts for early stage impact founders? Maybe, yeah, those of them who haven't thought about this as robustly, this is kind of their first introduction to the, the quanti— quantifying social impact. Just final closing thoughts before we end it.

Yeah, I would say think about this early. Think about what you care about and what your people, your stakeholders care about, and start collecting data as soon as possible. Ask people. I mean, this is, I think, just good information for any founder. Talk to your customers. But while you're talking to customers, try to think about impact. Ask people, did this thing happen that I hope to have happen? What kind of nutrients were you consuming before you joined? Ask these questions. Try to collect data. I work with a lot of companies that come to me later on. And we kind of have to work backwards. And, you know, if you are collecting information earlier, it will inform the growth of your company. You'll be a lot smarter and you'll be able to do more effectively, you know, the thing that you started your company to do. So, you know, that's what I would say.

It's never too early to start thinking about this. Absolutely, totally agree. Wonderful presentation. Yeah, everybody will get a copy of this webinar in their email within the next couple of days. Thank you so much, Katherine Griffin, for joining us today and sharing about this important topic with the Founder Institute community. We super appreciate your time, and stay healthy, everybody, and stay safe.

It's great to be here. Thanks, Dustin. Bye, everybody.

Bye.