SOCIAL ENTREPRENEURSHIP: FOR PROFIT OR NOT FOR PROFIT

Should social innovators like Arunachalam Muruganantham (aka PadMan) create for-profit or non-profit ventures? What should entrepreneurs and innovators do with social impact ideas, and should they be for-profit or non-profit ventures?

The idea of a for-profit social enterprise may seem difficult to comprehend. Making money and doing good for the underprivileged just don’t seem to go together. However, the new wave of social entrepreneurs have realized that innovative and sustainable businesses are the best way of doing social good. For social innovators like Arunachalam Muruganantham, who are working towards scaling up their idea to as many people as possible, to reach greater social good, a for-profit venture is the best possible path. 

Non-profit organizations are very difficult to scale. They are mostly backed by donations and grants. In the long run, these grants will become difficult to obtain, and the organization’s functioning may be affected by this. Many say that non-profits could become sustainable from the income generated from their programs in the long-run, but data from even the biggest non-profit organizations in the world show differently. A report published in 2019 by NonProfit Times, on the top 100 nonprofits in the US, shows that only a little more than 25% of their total revenue comes from program revenues and less than 5% from investment income. As a social innovator, Arunachalam Muruganantham wants to rapidly scale up, and make menstrual hygiene products available to menstruators across the country. His dream was to bring access to these products for everybody irrespective of their economic and geographical background. Taking the route of a non-profit venture would be a harder path to accomplish this. 

Making his venture a for-profit venture would also mean that he can attract investment funds from the private-capital markets. Some of them will also draw on private revenue sources to fund at least a portion of their activities. By serving markets for which the profit potential is high, for-profit ventures can free public and philanthropic resources to focus on those segments, and programs that need subsidies. In Muruganantham’s case, he can further use the revenue and funds to provide his equipment to communities in parts of the world where his product may not be affordable.

For-profit organizations are in other words, business ventures that work towards social welfare. Branding a business around a social welfare initiative can also be a great marketing strategy for brands. It has been shown that such socially-responsible branding is very effective, and customers are likely to be more satisfied by interacting with such brands. Footwear brand TOMS is one example of a social enterprise that has used its social branding as a marketing strategy also. TOMS has committed to donating one pair of shoes to an underprivileged kid for every pair of shoes purchased from the company. To date, TOMS has managed to donate over 60 million pairs of shoes, restore eyesight to over 400,000 people, and give over 335,000 weeks of safe water, and is a compelling case for the difference for-profit social enterprises can make. 

Great employees and collaborators are essential to any organization, and the same goes for social ventures. The biggest merit about working in a for-profit setup is that for-profit ventures can attract best-minds with perks and monetary rewards. Unlike non-profit ventures, that find it harder to attract qualified and bright minds to work with them, skilled personnel can be attracted in a for-profit setup. In a non-profit structure, employees are unlikely to be highly motivated, as there is no incentive to be creative and efficient at their job, as nonprofits can never offer the perks a for-profit enterprise can provide. Hence, it has been seen that employees of nonprofits are likely to leave for professions with higher rewards in other sectors. 

Social ventures are often associated with philanthropy and thought to be loss-making. Muhammed Yunus of the Grameen Bank in Bangladesh has changed this perception. Grameen Bank provides small loans to those living in poverty so that they will be able to become financially self-sufficient. Rather than operating like most banks or lenders, the Grameen Bank requires no collateral from its borrowers, whatsoever. Although it may seem like a fatal business plan, the Grameen Bank has proved otherwise. The Grameen Bank has managed to bring in a net income of $10 million. And proved its case; that you can make money while doing good. 

Disconnectedness in the times of COVID

The everyday manifestation of civilization is in the almost unconscious, common sense that expresses a people's shared idea of reality. This common sense is different for people in different times and places and is shaped by a person's collective  responses to their material conditions of existence. On the onset of the pandemic, the existing material conditions seemed to crumble down and a new normal was set into motion, changing civilizations and lives, altogether. This essay strives to analyze the circumstances leading to the decline in connectivity within India, during the Covid-19 pandemic. 
Covid-19 outbreak will eventually radically change the way society is arranged. Indian society will witness a detachment of individuals from their families. The ancient Indian social structure of interconnectedness will break down, and nuclear families will become distinct units that no longer rely upon a huge chain of relatives. In India, most people live with their parents, at least, until they get married. And after the elderly parents reach a certain age, they move in with their children. These intergenerational living spaces are common in most households across South Asia. And these structures are considered the backbone of Indian familial bonds. The elderly are more at a risk from the coronavirus, with a higher mortality rate, due to their weaker immunity. Having a potentially asymptomatic carrier and a vulnerable elderly person in the same house will result in an increased risk for the senior member. With the economy going back to its normal state, and people heading back to work, despite the COVID patient numbers rising day by day, employed children of elderly parents do not want to put their parents at risk. Taking this into consideration, younger Indians who are returning to work, post-pandemic, are choosing to move out of their parents' houses. They are choosing to move out to live on their own. With the Sars-Cov2 virus showing no signs of receding, this change is likely to become a permanent one in the familial structure of Indian society. And irrespective of if the pandemic completely ends or not, this is an unstoppable civilizational change in motion. 
This disconnect is added to by the existing social distancing norms that have restricted all large gatherings. Among other gatherings that have a restriction; the number of people attending wedding celebrations should not exceed 50. In a land famous for its Big Fat Indian weddings, with over 10 million weddings happening per year, this will mean a change of plans for couples and their huge Indian families. Wedding ceremonies during the pandemic have become intimate closed family affairs, and this seems to show the beginning of the decline of The Big Fat Indian wedding. Indian weddings are a time when extended family and friends of the bride and groom come together to celebrate, and these reunions have become an integral part of Indian culture for the past decades. They have become the bonding glue between family members, creating occasions for even extended family to meet and spend time together. The decline of large weddings will further push the disconnect among families. With nuclear families becoming independent units, pushing away their extended family beyond reach. The busy lives and urbanization pre-pandemic has already affected these bonds, and the pandemic will become a reason to further distance oneself from one’s relatives.  
Communicable diseases like the COVID-19 virus depend upon chains of interconnections. They follow the networks of social beings. They catalog the objects we share, the places where we reside, and the spaces through which we pass. And in the absence of any proven way to stop the spread of this deadly virus, disconnection from human interaction, as the only way has become the way of life. With the pandemic further intensifying, the disconnectivity is deeply penetrating, every sphere of life. Countries, communities, families, neighborhoods, are all cutting off from the rest of the world, to ensure their wellbeing and safety, without cooperation. 
This everyone-for-themselves spirit means that in panic mode to save oneself, people tend to leave behind others. With the whole world going into a  standstill with only essential services like medical care and grocery stores opening, people across the country lost their jobs and were stranded in unknown parts of the country, away from home. The pandemic in India impacted the lives of all citizens undoubtedly, but some were more affected than the others. Marginalized communities are at greater risk in this new normal. Minority communities including women, migrants, Dalits, and other underprivileged communities who were already at a tough spot before the pandemic, are now at the receiving end of greater hardships. The pandemic magnifies all existing inequalities. With Anganvadis and Schools shutting their doors, a new burden of childcare has arisen. Around the world, childcare responsibilities are seen to fall on the shoulders of the women of a household- mothers, and sisters of the family. Quoting, Clare Wenham, an  assistant professor of global health policy at the London School of Economics: “What do pandemic patients need? Looking after. What do self-isolating older people need? Looking after. What do children kept home from school need? Looking after. All this looking after—this unpaid caring labor—will fall more heavily on women, because of the existing structure of the workforce.” 
These additional responsibilities mounded upon women, added with their loss of employment, will result in the compromise of the woman’s independence, in households across India and even in other parts of the world. Women’s independence becoming a silent victim of this pandemic. Reverting times to India’s distant past, when women were bound to their homes, with limited access to social interactions and connectivity. 
The pandemic has unleashed an everyone-for-themselves spirit —from export restrictions on essential goods to a feverish competition to develop a vaccine first— every nation, every country, every group of individuals, are ready to push one another off the ridge for one’s survival. The United Nations has made various pleas for greater international cooperation, with the secretary-general urging a global ceasefire among warring parties. The World Health Organization (WHO) attempted to organize a global response to the virus at its annual meeting. However, the world’s biggest political power, the United States, immediately announced that it would be pulling out of the WHO, very few combatants observed a Covid-19 ceasefire, and there is no coordinated international response to the pandemic outside of the community of scientists sharing research.
Amidst the pandemic, though disconnectivity has grown out of proportion, some sections of Indian society have been proved to be a silver lining. This humanitarian spirit came about shortly after the Air India flight crash-landed at Calicut International Airport in Malappuram district of Kerala. While the crash has resulted in numerous deaths and many more critically injured passengers, the local citizens of nearby Kondotty, which was a containment zone due to the pandemic, outstretched arms and saved hundreds of lives. Despite the COVID threat and the ongoing floods in the area, the humanitarian service mentality and social unity of the people of Malappuram rekindle the spirit of humanity. The spirit of such communities gives us a vision of a future where disconnectivity does not equate to the absence of humanity; where social distancing becomes merely physical distancing. 
The Covid-19 pandemic is, without doubt, the biggest pandemics the world has faced in recent times, and will deeply influence the lives of people who survive the pandemic and even the coming generations. It has profoundly impacted the way people think and act today within their communities. With the fear of death hovering over each individual, people have been portraying their rawest of emotions; mostly working in the interests of themselves alone. This has led to a widespread disconnect between individuals, societies, communities and even among nations of this new pandemic feared world. This has raised numerous civilizational challenges in India and the world over, in different forms and magnitudes.  Most of these changes have been alarming and are frightening and raise lots of concern about the future, some even crushing the spirit of humanity. All said and done, the human spirit is said to have survived worse. And the hints of humanitarian concern expressed by people, like those in Kondotty, seem to provide hope to the world, that this too shall pass. 

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Hikewise: Kozhikode's budding Ed-Tech Startup

On the 14th of March, 2020, I had the honor to interview Mr. Mohammed Ammachandy, who is the founder-CEO of Hikewise. Hikewise is an online career counseling company, founded in 2017 which is currently operating out of Kozhikode, Kerala. Mohammed Ammachandy is a graduate in Mining Engineering and a post-graduate in Safety Engineering and Disaster Management from IIT Kharagpur. While he studied in Kharagpur, alongside a group of friends he started a social venture in which students of the institution helped provide an education to the less-fortunate students who lived in extremely devastating environments very close to the institute. After his short stint in the social sector, he wanted to pursue a career where he could make a change and decided to pursue a career as an IAS officer. After he graduated in 2016, he attempted the UPSC examinations to pursue his IAS dream. While he was studying for his UPSC examinations, he also collaborated with an online UPSC coaching app named IAS Baba in developing its content. He also worked with an NGO based in Wayanad in the education sector in the months before he received his

UPSC Main exam results. After he failed to clear his UPSC Mains paper, he knew that he wanted to start a venture of his own that could make a change in the education space. This is how v-Lead Eduventures came into the picture. Mr. Ammachandy tells me, he had always seen himself doing something in the social sector, “probably running an NGO or a social venture of some sort in the education space, however, life had other plans for me”, he says. Within a few months, he had formed his founding team who together narrowed down the idea for an online career counseling service. They realized that the market did not have many big players and had lots of scope and potential. Hikewise then spent around one and a half years perfecting their psychometric analysis aptitude test, collecting data from over 10,000 students across the country. They wanted to be different from other existing career aptitude tests which were direct replications of career analysis tests from the west. Their product is different because it takes into consideration the Indian context. The product officially hit the market at the beginning of 2018.

Interviewing Mr. Ammachandy changed a lot of my views about an entrepreneur’s mindset. Unlike most of the cases I had read in class, Mr. Ammachandy has followed a path of completely effectual entrepreneurship. He made decisions on the way, learned A to Z about entrepreneurship through his journey. Neither he nor his founders have any sort of entrepreneurial exposure or corporate exposure. The company is a huge leap of faith taken by the founders. However, he tells us that he was always confident about his idea. He realized he didn’t know it all, only after the product hit the market. He tells me, “When I started my entrepreneurship journey, I think I was a bit too delusional, I thought that if any great product hit the market in this digital age, it would sell like wildfire”. From the basics such as having a marketing and sales team, he had to learn it all from scratch. They never had a proper expansion plan or outreach plan. Mr. Ammachandy says, he does wish he knew more about this field before he jumped into it, but this journey has nevertheless worked out for the firm and him.

His journey and the journey of Hikewise has been filled with challenges of various sorts and he tells me that the way ahead will probably only get harder when his firm decides to scale up. Since Hikewise followed a path of effectual entrepreneurship and the team consists of people from a non-business background consisting mostly of engineers, they faced their first setback within a very few months of starting.

1. Lack of Proper Marketing and Sales Team and Strategy

Hike wise realized the necessity of proper sales and marketing only after an operational duration of 4months. “Before these initial months, we thought that if our product provides accurate results and receives great customer satisfaction, it will succeed through word of mouth publicity”, says Mr Ammachandy. In the process of perfecting our product, we invested most of our efforts in this and did not develop a proper marketing strategy. It was after this initial setback, that Hikewise realized the importance of a proper marketing and sales team and invested in curating an efficient marketing and sales team.

2. Creating Product Awareness

For a specialized product such as career counseling, which most people do not realize the necessity for, creating a need for this product was one of the major challenges for Hikewise. In a social setup like India, where we make career choices in discussion with parents and other elders in our close connection, the need for this service needed to be created. For this, Hikewise chose the route of outreach programs through tie-ups with schools, NGOs and other educational institutions such as training/coaching centers.

3. Ticket Pricing and Unit Economics

Since the firm is founded by Mr. Ammachandy who is a social entrepreneur at heart, Hikewise has always wanted to become a firm that caters its services to all social groups. In this motive, Hikewise initially priced their services at a very low price. But soon realized that this pricing would not allow them to meet their basic unit economics. They later had to increase their prices by almost double. However, he tells us that this has not in any way affected their sales as most customers for their service value their services highly and are willing to pay any amount for it. In fact, many customers tell them that they are under-pricing their services, as most competitors lack this level of accuracy in their services and charge almost thrice their prices for the same services.

4. Wrong Geographical Location for Setup of Company

V-lead Eduventures, the parent company of Hikewise, is currently operating in Kozhikode, a tier 2 city in the Southern state of Kerala. It was set up in Kozhikode due to the convenience of the founders, as most of the founding members are from places close to Kozhikode. However, currently, they are facing numerous logistical issues due to the location of their main office. They are currently in talks to relocate their main office to Kochi. “Currently, it is very difficult to woo people with great exposure and experience in this field to come and join us in Kozhikode even with huge salaries and perks. Kochi will give us an edge in doing so. Also, we will have a better outreach, after shifting our operations to an IT hub like Kochi, without losing out on our current reach in this area.”, says Mr. Ammachandy. Also, moving to an IT hub like Kochi or Bangalore will give them more perks in the scaling-up process.

5. Scaling Up

VLead Eduventures, the parent company of Hikewise is currently looking forward to scaling up as they have received their first round of funding, after numerous failed attempts at securing funding from big VC companies in India. Taking a firm in this sector forward is a very difficult task, especially, for a company that believes in the quality of its services over everything else. Training a large set of counselors is a large task and may lead to compromising on quality. The selection process for the current counselors involved scrutinizing over 600+ applications, so the company is looking at ways to scale up without compromising on quality. Hopefully, they will succeed in doing so and become India’s largest career development company within the next 5 years, both in quality and quantity, says Mr.Ammachandy.

Career Development Market In India:

The career Development market in India has a large potential. It is mainly categorized by a few small players each with a limited market share. The sector has currently not been completely explored, with only very few students currently taking career guidance before choosing their career paths. However, data from recent studies show that around 85% of students are concerned about which option to choose for higher education and 92% don't get any career-related guidance from their school (India Today). This shows that the career counseling market’s potential is waiting to be tapped. Despite such a low client base currently acquired, the career guidance and assessment market is a budding market and with the rising awareness, it is witnessing exponential growth over the last few years.

This is a service which is very important in this day and age, where every day millions of graduates are unfit and unskilled for the job market, and numerous others are dissatisfied with their current jobs. Among people who have a graduate degree or above in India, 35% are currently unemployed and this mainly consists of young people(Economic Times). This is mainly because these people don’t have the skills that the market requires or because they lack skills in general. If these students had received proper career guidance during their early years, they could have channelized the energy into areas where they possessed better aptitude and skill and they would be leading a life of higher quality now. Another major issue is the fact that with the rise in technological advancements, old jobs keep disappearing and newer types of jobs are getting created every day.

 

Only if students receive guidance in making career decisions will they be exposed to the plethora of jobs that will be available in the future. With recent innovations in technology and the ease with which it is being incorporated in the field of career analysis, to assist students in making career choices, the news is far more heartening than it has been for career aspirants from a decade ago. Career assessment tools are increasing in number and the detail in the reporting that they do is ever-increasing, offering a well-rounded idea of the capabilities that are present and those that need to be built up, in order to match dreams with opportunities that exist, or are appearing on the horizon. Examining multiple areas to help match career aspirants to their career paths of choice,

such as personality, aptitude, interest and work value preference are the services that this sector can offer. Other than career counseling, the industry also includes foreign university admission and application assistance and other services.

And above all, the biggest difficulty faced is that there has been a traditional over-reliance on a number of things that have passed for career guidance, such as the friendly advice offered by peers, parents or members of the family. It still remains a huge challenge for companies in this sector to convince potential clients to use their products. And this difficulty only increases for firms targeting audiences from Tier 2 and Tier 3 cities. Currently, the career guidance market is highly disorganized and consists of numerous small firms which claim to provide career guidance but follow extremely unscientific approaches to career guidance. They mostly follow methods of intuition and suggest traditional career options that they are aware of. In most of these cases, the counselors have no skill in the field and may lead students to take extremely ignorant career decisions. Snatching clients away from these traditional players is an extremely difficult task, for these new online career assessment tests and counseling providers.

 

The career guidance market in India is currently estimated to be above rupees 5000 crores and is constantly flourishing (Ministry of Human Resource Development, Government of India, Ernst and Young Report on K12 Education, KPMG market report on K12 education). And with the importance of career guidance being recognized by educational boards like CBSE and other state boards, this sector can witness a spree in its market very soon. The CBSE has recently made it mandatory for all schools to make a career counseling facility available to students. Alongside this, The Draft of the New Educational Policy which was published in 2019 strongly emphasizes the significance of skill and personality-based career guidance. These governmental decisions are sure to boost this market further.

The career guidance market does not cater solely to young students of school and college, they also provide services for people who are currently dissatisfied with the line of employment they are currently in. They provide all sorts of guidance for people who are discontented with their current job and impart guidance on switching careers and how to do so. This market is a newly developing segment, with more and more people feeling frustrated with their current jobs which don’t let them live their life to the fullest.

 

As the market is booming, it also offers a lot of employment opportunities. According to the 2018 Annual International Career and College Counselling Conference held in August 2018 in Delhi, India’s 350 million students, would require at least 1.4 million career counselors to maintain a globally acceptable student to counselor ratio. As the sector reaches its complete potential, it can provide jobs to numerous young graduates.

 

Other than career guidance, the sector includes foreign university application assistance and counseling, and skill training workshops and internships and many more. Foreign university application assistance is currently one of the most sought-after services in the past few years. With the constant dissatisfaction with the quality of education in India, the number of students who prefer to go abroad for their education is multiplying year by year. However, with the long and complicated admission procedure for universities, most students seek professional help from foreign admission counselors and the demand for this service is only predicted to increase year by year.

 

Overall, the career development industry in India is witnessing steady growth and with the expected government policy which advocates the necessity of career counseling facilities, the future is bright for this industry.