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Our guest bloggers are friends of Miller Center for Social Entrepreneurship that share a passion for creating change in the world. From experts in various fields to students and partners, our guest blogs cover a wide variety of topics in the context of social entrepreneurship, Interested in guest blogging with us? Send an email to gsbi@scu.edu.

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Guest Blog
Guest Blog - September 30, 2022

Energy Cannot Be Created Or Destroyed

Thoughts and Reflections from a Student’s Visit to Nepal

By Morgan Billington, Miller Center Fellow

If you had asked me how I thought I would be spending my summer a year ago, I likely would have shrugged my shoulders and replied with a common response: “I’m not sure yet, but hopefully I can get an internship in the city.” I had known about the Miller Center Fellowship through my friends who were on the leadership team for Into the Wild with me at Santa Clara University, but I had never considered myself to be a fit for the fellowship. This hesitancy, I think, was largely due to my fear of failure. After taking time to explore the program more deeply, and being nudged by my Environmental Studies professor Chris Bacon, I decided to take the leap and apply. I remember hitting the submit button on my application and slamming my laptop shut, heart racing, wondering what I had done. Little did I know just how formative the next few months would be for me.

I was primarily drawn to the fellowship program because I was interested in learning more about a specific enterprise, Gham Power. As an Environmental Studies and Economics double major, both my academic and personal interests aligned with Gham’s mission — to empower vulnerable Nepalese communities to thrive by providing them with renewable solar energy solutions. Since being founded in 2010, Gham Power has significantly expanded its products and services to address the dynamic needs of the Nepalese. The social enterprise has designed and installed commercial and industrial solutions, microgrids, and solar water pumps, while also partnering with microfinance organizations in order to expand their reach. More recently, Gham Power has turned to digital agriculture in launching its new SuperKrishak app, which is designed to help farmers improve their farming techniques and increase their incomes.

My partner for the fellowship, Maggie Walter, and I began by focusing our research on helping Gham to improve the effectiveness and accessibility of the SuperKrishak app. In collaboration with Jonifa Ghimire and Wandana Shakya, both of whom are on Gham’s marketing team, we researched strategies to transition farmers from Gham’s Facebook Group to the Super Krishak app. We also analyzed digital agriculture and app usage in other countries in order to develop recommendations for scaling the SuperKrishak. I quickly found myself invested in my research, and was eager to learn more. It felt rewarding to be researching something that was so tangible, useful to Gham, and that I knew actually mattered. Despite having to sit down for our weekly meetings every Sunday at 9:45 PM PST because of the time difference, I would hop on the Zoom calls feeling excited, and leave feeling giddy. Maggie and I would text each other after our meetings were done, and without fail would both express to each other things like “Wandana and Jonifa are SO kind” or “I always leave this meeting smiling.”

In early May, Maggie and I met for our weekly check-in with our advisor for the fellowship, Stephen Carroll. Stephen is one of the wisest people that I know — he is thoughtful and charismatic, a deep listener, and is not afraid of asking the hard questions. It is difficult for me to put my gratitude for Stephen into words, but this is me trying. I remember during this particular meeting I decided to be a bit bold and ask Stephen what the chances were that we could travel to Nepal. I was expecting to be immediately shut down, given that due to the pandemic, the fellowship had been constrained to an online format. Much to my surprise, Stephen sat back in his notorious fold-up chair, thought for a while, and then replied: “It could happen, but only if the COVID level is safe for travel. I think that’s anything Level 2 or below.” He advised us to look up the US Department of State’s Travel Advisory Level for Nepal. At that time, Nepal was classified as Level 2: Exercise Increased Caution. Maggie and I looked at each other with an inkling of hope — maybe, if everything went right, we would find ourselves in Nepal for the summer.

June and July flew by in a whirlwind that was filled to the brim with productive meetings, ceaseless planning, and a fervent desire on our end and on Miller Center’s end to pull everything together. Walking into the travel immunization clinic to get my shots, and sending my passport off in the mail for my visa application made me realize that I was actually going to Nepal. Growing up in Europe, travel is something that I have been lucky to have done from a very young age. I took my first international flight with my family before I turned one, and traveled alone as an unaccompanied minor throughout my teenage years. And yet, as I began packing my bag to leave, I couldn’t help but notice the knots in my stomach. My mind raced with questions. What would monsoon season be like? Would my rain jacket suffice, or should I travel with an umbrella? What did most people wear? Would my long skirts help me to better fit in? How would I get to work each day? By foot, or by taxi? I did my best to push these questions aside and embraced my uncertainties as I boarded my flight to Qatar. After running through the Doha airport to make our connection, I collapsed into my window seat, relieved that we were finally flying to Kathmandu.

We landed in Kathmandu at 3am after what at the time felt like five days of travel. I suppose that’s what a 12 hour and 45 minute time difference coupled with over 20 hours of flight time will do to you. As we headed from the Tribhuvan International Airport to our first hotel, I gazed out of the rain spattered window, desperately trying to catch glimpses of the city through the darkness. After doing our best to recover from jet lag, Maggie and I went into the Gham Power office on Tuesday for our first day. We were given an office tour, where we met the staff and exchanged introductions. Immediately, I was struck by the humility of everyone. We had a fruitful discussion with researcher Nima Thing in the morning about digital agriculture, and interviewed our first farmer, Tara Ghimire, after lunch. Despite not speaking English, Tara’s smile and her eagerness to engage in conversation nonetheless was contagious.

On Wednesday, we traveled to a farmer cooperative in Kavrepalanchok District, where we held our first focus group discussion with the help of Jonifa, Wandana, and Kiran. The farmers were keen to engage in conversation, and provided thoughtful feedback with regards to which features they wished the SuperKrishak app had. After saying goodbyes to the farmers, we visited the beautiful Namobuddha Monastery in Panauti, where I was struck by the expansive architecture and profound calmness of the area. The view of the valley below was truly breathtaking, densely packed with thousands of different tree species. As someone who has a tremendous love for the outdoors, I felt sad to have to leave. The views of the bright green, almost fake looking hills on the ride home made it worth it.

On Thursday, Jonifa and Wandana took us on a personalized sightseeing tour around Kathmandu, where we started in Durbar Square to sample some traditional cuisine. I couldn’t help but feel like Anthony Bourdain as I literally crawled into a stone walled structure and watched a local woman prepare the food right in front of my eyes. After a delicious meal, we visited the Patan Museum, which featured stunning fountains with gold plated spouts. We made a quick stop to visit some mandala thangka artists outside of the square, one of whom graciously explained the symbolism of the artwork to me. (For those of you who are as curious about this as I was, give this a listen.) Swayambhunath Stupa, also known as The Monkey Temple, and Boudhanath Stupa were next. While walking around the Boudhanath Stupa, I saw a sign above a shop that really struck something in me. It read: “May all sentient beings be happy, healthy and peaceful.” In that moment, I couldn’t have been more grateful. Grateful to be learning from the sights, sounds, and smells surrounding me. Grateful to have the opportunity to be immersed in a country with core values rooted in pluralism. I remembered learning in a comparative religion class at SCU about how pluralism plays a role in Buddhism — specifically that Buddhist tradition emphasizes the respect of all beings. When I saw this sign and observed the thousands of people swarming around me, I couldn’t help but think about one of my favorite quotes: “Happiness is only real when shared.”

As the next few days unfolded, I began to think more about the sign I saw in Boudhanath Stupa. I had been told time and time again that Nepal is a “cultural and religious melting pot”, but I believe that it took visiting the country myself to fully understand what this means. Nepal contains a complex and unique mix of people, with influences from other countries including India, Tibet, Pakistan, and Bangladesh. Both Buddhism and Hinduism are common in the country, and both groups are tolerant of one another. And, despite their differences in religious beliefs, castes, and social hierarchies, I have observed that most Nepali people are deeply happy. I say this not with the intention of glorifying poverty or supporting the notion of money not buying happiness, but because I consistently witnessed people expressing their gratitude and insisting that they share their happiness with me. Perhaps this initially shocked me because of how individualistic American society is, or because of how little people choose to express their happiness back home. That being said, I also admire the Nepalese for their honesty — those people that I interacted with expressed their satisfaction with life, but also shared their own flaws and opened up to me about their country’s issues.

On Saturday, we traveled to Biratnagar, a city located 10 hours away by car from Kathmandu. The roads were beautiful but extremely windy, and I quickly understood why Jonifa and Wandana had said to get in a good sleep the night before — there would be no sleeping on this bumpy ride. The following morning, we drove into the Sunsari District and held another focus group with local farmers. Surprisingly, the majority of them had never even heard of the SuperKrishak app. This was inherently useful information, and we were able to glean other practical insights from the group. In the evening we met with Hira Thandar, the current manager of the microfinance development bank FORWARD (Forum for Rural Women Ardency Development). Hira was incredible, or, as I prefer to say, an absolute girlboss! The work she is doing is inspiring and hugely beneficial to female farming communities both in Nepal and in India. Hira later introduced us to Bhagbati Chaudhary, who is the managing director and executive chairperson for FORWARD and who was also previously the State Minister of Forest and Soil Conservation of Nepal, as well as a member of the Nepalese Parliament. Bhagbati told us more about FORWARD and described her experiences working within the Nepalese government. I felt lucky to be in the presence of such powerful women. On our final day in Biratnagar, we visited Namaste Jharana in Bhedetar, which features a waterfall that is 80 meters high. To say it was impressive would be an understatement.

Before we could even blink, it was time for us to say our goodbyes. There I was, standing in the Gham Power office giving everyone a hug and promising I would visit again soon. There was still so much more to see! On my flight back home, I had the pleasure of sitting next to a Nepalese man named Karna with whom I spoke for hours. He told me all about his life and I told him all about mine. He asked me about my stay in Nepal: what I had been up to, the places I visited, the foods I ate, and what I had learned. Answering the former three was straightforward, but I had to think a lot more before I could address his last question. I had learned so much — I felt tongue tied as I tried to process and summarize my key takeaways. So, here they are now.

  1. Organized chaos can be good
  2. Growth is a nonlinear process that comes in waves
  3. Humility, tolerance, honesty and generosity are essential
  4. Don’t shy away from discomfort, embrace it and be flexible
  5. Energy cannot be created or destroyed, but bad energy can be transformed into good energy if you are persistent

I’ve reached a logical point in concluding these reflections, and somehow I still feel that there is much more that I could say. Nepal, thank you for your boundless kindness, and thank you to your people for embracing me with open arms. I will be back soon.

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Photos:

  1. Interviewing Tara Ghimire (right), one of the smallholder farmers working with Gham Power. I’m on the far left.
  2. This sign above a shop in Boudhanath Stupa really struck something in me.
  3. Visiting Namaste Jharana in Bhedetar, which features a waterfall that is 80 meters high.
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Guest Blog
Guest Blog - August 22, 2022

Financial Models as a Decision-Making Tool for Social Entrepreneurs

In the seven years that I have been mentoring social entrepreneurs in Miller Center accelerator programs, I have noticed that financial modeling is the one aspect of the program that causes the most distress for many entrepreneurs. This is understandable since the concepts and terminology are often unfamiliar to social entrepreneurs and the type of model to be used can vary by the nature of the business — service vs product for instance. Multiple product lines and hybrid business models further complicate the modeling task. The finance experts at Miller Center are available to help entrepreneurs with choosing the right modeling framework. My experience working with social entrepreneurs has taught me that they don’t fully grasp the value of financial models as a decision-making tool. This is what I am going to write about in this blog.

Two Views of Financial Modeling

There are two views of financial modeling. There is the accounting view, which is historical and views financial statements as reports on business performance. When public companies release quarterly statements, they are taking an accounting view. The other view is the financial view. This is forward-looking and views the financial model as a tool for decision-making. It is this view that private social enterprises must adopt.

Financial Model Makes the Business Plan Concrete

The financial model brings the various components of the business model together — the unit economics of the products or services, the choice of target markets, the go-to-market and sales strategies, and the financing decisions. The income statement of the financial model captures the sales growth trajectory. The size of the target market, go-to-market strategies, sales process, intensity of competition, and production capacity will determine how fast sales can grow. The unit economics — the profitability of each unit of product or service — determine how operating margins will grow with sales. In short, a well-articulated financial model can demonstrate that the entrepreneur has a good understanding of her business.

Set Targets not Projections

Some founders are troubled by having to forecast their sales over multiple years. Yes, I understand forecasting sales is difficult to do especially for early-stage startups. The task for entrepreneurs is actually simpler than that. Entrepreneurs must view the sales numbers that go into the model not as projections or forecasts, but rather as targets they want to achieve. Targets spur action. Marketing and sales strategies, and production capacities should be geared to achieve those targets. Early-stage entrepreneurs should set modest targets for the near term (6 to 12 months) since during that period the entrepreneur is exploring product (or service)-market fit and it would be unwise to push for aggressive targets until there is evidence of product/service-market fit.

Track Actual Sales Performance 

It is important to periodically compare your targets with actual sales achieved. This is how the entrepreneur learns whether her strategies are working and what adjustments are needed. Small deviations from the targets cannot be avoided. However, if the actuals are significantly short of the targets — either the entrepreneur misjudged the product-market fit or his sales/marketing strategies were inadequate to achieve the targets. If the actuals are higher — and it is not explained by an unusual event — the entrepreneur may have been too pessimistic in setting targets. Large discrepancies between targets and actuals should trigger reevaluation of the business plan and updates to the financial model.

Set Monthly or Quarterly Targets for the Near Term

For the near term — the first 12 to 18 months — entrepreneurs should attempt to model quarterly financials. For early-stage entrepreneurs, I would go further and suggest that for the first 6 months the targets be set monthly. This goes back to the point about learning by comparing targets to actuals. Setting monthly or quarterly targets allows the entrepreneur to quickly learn whether her strategies are working and allow for timely adjustments to the business plan.

Cash is King

Financial professionals focus on cash positions in preference to profits. And rightly so. An enterprise can operate unprofitably for years especially when they are spending large sums on growing the business. However, if it ever runs out of cash, the business will have to stop operating. According to CBInsights, the number one reason for startup failure is running out of cash and failing to raise new financing. Hence, careful modeling of cash flows — again quarterly for the near term — is essential. The cash flow statement is what tells the entrepreneur how much financing is needed. Even if the business is highly profitable, careful modeling of cash flows is important due to the time gap between when the business has to pay its suppliers and when it receives money from its customers. It is the cash flow statement that feeds the numbers that go into the “justifiable ask”.

Be Optimistic While Setting Targets, but Pessimistic While Raising Financing

The entrepreneur should be slightly optimistic in setting sales targets — it is good to have his reach exceeding his grasp. However, in calculating financing needs one should be a bit pessimistic — the unexpected can always happen, but the business should not run out of cash. The common advice is typically to provide for an 18-month cash runway.

Some entrepreneurs have the opinion that the financial model is done only for the purpose of fund-raising. I hope I have made the case that the financial model is primarily for the benefit of the entrepreneur and only secondarily for investors and the board of directors. For investors, a summary of the financial model with annual numbers should suffice. With the right mindset, the entrepreneur can approach financial modeling without trepidation.

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Photo by Firmbee.com on Unsplash

 

Prabhakar (PK) Krishnamurthy has held several senior positions at large companies as well as startups in Silicon Valley over the past 25 years. He mentors startup CEOs at Miller Center for Social Entrepreneurship, as well as at BRIIA – an accelerator for AI-powered enterprises. He maintains a blog at https://pk-kpkar.medium.com where he writes about business, technology, and literary topics. He holds a PhD in Management Science and Engineering from Stanford University.