From when I was 4 until at least 17, there was little I could wish for more than a good, deep, snowday. I'm sure I wasn't alone in that wish – as soon as the weather started to cloud, and the radio blared that a storm was on the way, I'm sure I was joined by millions of small prayers hoping, wishing, desiring for another day to stay home.
But now things are different. I'm 30, I've built up a small nonprofit over the past few years out of the investment of a friend and my own, and we're betting over 60% of our income right now on earnings that materialize if we deliver the goods: train social entrepreneurs who will either launch revolutionary ventures tackling social challenges for the Jewish People, or train cutting-edge employees and leaders for organizations, Federations and foundations who will help upgrade their institution's operating processes.
And so when the NYTimes says this is an Epic Storm, and when American Airlines cancels my flight out to LA — leaving me fighting for a place on the standby list — I can't be any more different than the 7 year old version of me, sitting by the window willing the flakes to fall faster.
I started thinking about this distinction because I recently saw a heartfelt article
by my colleague Dan Sieradski, about how one needs to be independently wealthy to start a new venture. In the article, Dan laments that he had to withdraw his application from a program that might help start his new venture because he realized "it would be virtually impossible for me to do this fellowship without undertaking a massive lifestyle change."
I feel his pain, and went through a lot of the same questions when we started PresenTense. Back then, when we started PresenTense Magazine, we applied for grants and sponsorships but got none. Bikkurim said no, UJA-Fed's COJIR said we weren't their type, and Natan was also skeptical. We projected we'd need $10K to get the first version out so we can start selling ads and subscriptions, so we took out new credit cards and took the risk that earned income from ads and subscriptions would pay us back. Luck was with us — we've printed 10 magazines since then, and run hundreds of events — but it could easily have been a crash and burn. And that would have hurt.
About a year and a half later, when Aharon and I launched the first Institute in 2007, we put another chunk on our cards — taking advantage of low interest to take the risk that our consulting income would rise. It wasn't until the Spring of 2008 – after two years of carrying debt — that we had our first big win: the AviChai Fellowship. Sure, we could pay back our interest through earned income — and even paid down a bunch of the principal — but it was AviChai that gave us the runway to take the venture to the next level.
But that took two years, and a ton of sweat equity. No, we won't make a mint because the only "shares" we own of PresenTense are the share of mindshare from the hundreds of volunteers from around the world.
During those two years the story of PresenTense is similar to that of most start-ups: we worked other jobs, everyone was volunteer, and I moved into my parents house for two years to save on rent. If it wasn't for my parents house, and use of storage space in my dad's office for magazine boxes, I'm not sure where PresenTense would be. But luckily we used the resources we had and now we're earning almost $2.10 from tuition and services for every $1 of grants.
As for our fellows, from my knowledge, out of the 41 ventures we've launched, only 47% have received follow-on funding; 81% of our fellows, according to a count a few months ago, now work full-time in the Jewish World — but that means that most of them found other jobs for Jewish Organizations. A win for the Jewish People? Sure – they got passionate, entrepreneurial folks with PresenTense's training. A loss for the fellows? I'm not sure what they'd say.
Is there a way to change this level of risk — I'm not sure. But I do think that we can have the Jewish People benefit a bit more and partially remedy the angst Dan expressed so well. Here are a few suggestions:
1. Every organization should invest at least 5% in launching new ventures within their structure, and should make those positions available to folks with ideas — an RFP for entrepreneurs-in-residence. This is good for folks like Dan with good ideas, and even better for organizations — just think: every year you get to test out new employees who come with their passion and drive to push forward the mission of the org.
2. Every foundation should provide at least 1% of their funds to organizations who have running programs with 0-4 employees. It might not seem like much, but that amount would radically transform the ability of small start-ups to run programs that generate revenue — leveraging donations to increase the size of the pie.
3. Funders should demand organizations who have marketable products to grow their earned income base by 10% a year — and reduce funding accordingly unless the organization can make the credible claim that a new investment will enable additional earned income. Of course, follow-on funding should be tied to benchmarks to ensure the organization made good on its word.
4. Funders should learn from VC to give larger investments, but benchmark those investments to performance targets. Sufficient runway is key for takeoff. Some organizations will take 4 years to get stable, others will take 2 years. Funders should be able to value the organization in accordance with its plan and put their money down in accordance — so the organization will know they're covered for the next few years if and only if they succeed.
5. Grant officers should rotate into organizations in the fields they fund, so they learn how organizations run — and so they can develop realistic metrics and grant reports to help organizations achieve their aims, and not add additional burden on leadership. Not sure if this addresses the problem at hand – I just think it would be a good idea.
And these five are only the beginning of a long list we have been kicking around in PresenTense — and hopefully, by the time we are done partnering with Federations and other large network organizations such as the JCCA, institutional support for start-ups and new ventures will become the norm and not the exception.
In the end, what we should not lose sight of is that the Jewish People is benefiting from passionate and creative people like Dan despite our inability to provide the support he needs to launch something independent. We should not lionize entrepreneurs at the expense of individuals who are working for organizations; both have their role, all are in this for the same higher purpose.