It’s not surprising that Aakash Mathur launched a company; he is, after all, a Wharton grad. Less expected, given business schools’ reputations as havens for 1-percenters: that the company would be Hydros Bottle, a startup dealing in water bottles with built-in filters, with a mission of reducing waste while bringing clean water to needy regions. And even more surprising, to some, is that Mathur and co-founder Jay Parekh decided to start and grow their business in Philadelphia.
Mathur says that decision just made sense. “We received a lot of support from the school and the city, in terms of helping us get the company started and make a lot of key contacts and put together a plan to go after this idea,” he says. “We really see a lot of enthusiasm here, and that support is pretty awesome.”
While the San Francisco region has a strong grip on the tech industry, and New York exudes a powerful gravitational pull on social media, fashion and other sectors, some say Philadelphia has a real shot at becoming the national locus for social enterprises like Hydros, businesses that have environmental or humanitarian motives baked into their core missions. Let California have Silicon Valley; social-enterprise advocates think Philly can repurpose its historic moniker as the City of Brotherly Love.
Garrett Melby, managing director of GoodCompany Group, a local social-enterprise incubator and accelerator, says that — while many aren’t aware of it here — elsewhere in the country Philly already has a reputation as a burgeoning social nexus: “Philadelphia as a hub for social enterprise has more credibility in San Francisco than it does in Philly. There are a bunch of things that have come out of Philly that are national foundations of this movement.”
That started back in the ’80s with White Dog Café mastermind Judy Wicks — the force behind the Sustainable Business Network of Philadelphia and an early proponent of social enterprise. Since then, B Lab, a certifying organization to recognize do-gooding companies as B Corporations, has sprung up nearby. Philly recently became the first city in the nation to get a regional offshoot of Investor’s Circle, a national organization of angel investors focusing on sustainable business. Volunteer writers have begun publishing the Philadelphia Social Innovations Journal, and even Wharton has switched gears to make social enterprise a priority.
In March, the social-job-search site Give to Get Jobs ranked Philly 10th among U.S. cities for social enterprise. Melby thinks he and his colleagues can help make it number one.
Four years ago, Melby helped launch GoodCompany Ventures, the country’s first boot-camp-style accelerator to prepare social entre-preneurs to attract venture capital; recently, he merged with Green Village, which runs an incubator (a longer-term, less-intensive offering) and mentorship programs also targeted to social startups.
This week, the accelerator greets its latest class of participants, companies from Sweden, Chile, New York City, D.C., Philly — and, yes, from the West Coast. With grants of $25,000 per year, the program has helped 30 entrepreneurs bring in $30 million in venture funding over the past three years. “It’s a program in Philadelphia that’s causing entrepreneurs in San Francisco to pick up and come [here],” Melby says. “That’s not something you see a lot of; there’s a lot going in the opposite direction.”
Melby and GoodCompany Group executive director Zoe Selzer say their goal is inculcating the business rigor entrepreneurs need to win clients and capture investments — while at the same time solving problems previously tackled only by nonprofits.
An example is One-Degree Solar, a startup looking to bring solar generators to households without access to electricity. Founder Guarav Marchanda saw nonprofits distributing solar generators, and decided to create a lower-cost, more versatile alternative. He’s now traveling Kenya, building a retail network via motorcycle repair shops. “If he cracks the code on making it commercially viable,” says Melby, “then it becomes something he can provide to hundreds of thousands of households, on a scale a nonprofit just couldn’t raise the funds for.”
Selzer says it’s about looking at social problems as market failures that can be solved with market-based solutions. “This is a really new sector, and we are, I think, on the forefront of defining what’s happening now, what’s for-profit and what’s nonprofit.” A solution like Marchanda’s could not only be big business for him — it could free up nonprofits to focus on more intractable problems.
That kind of thinking could be a major benefit to a city like Philadelphia. Deep-seated urban problems here may deter other industries; for social entrepreneurs, though, they present a perfect laboratory.
Gabriel Mandujano, founder of Wash Cycle Laundry, saw such a need in Philly’s swollen welfare rolls. He also saw an opportunity in the commercial laundry industry. “It was ready for a shake-up; there’s not a whole lot of innovation in laundry,” he says. He figured he could make it greener and more efficient, while building human capital.
The result: a company that delivers laundry on bikes, hires from welfare-to-work programs, and is crafting a management curriculum that teaches workers to take charge of their careers by tackling “stretch” assignments that allow them to explore interests and talents, like management or market research. “The goal is to be an escalator … to add mobility to low-wage service jobs,” he explains.
Still, while Philly presents plenty of opportunity to effect change, it also faces stiff competition, notes Leonard Lodish, vice dean of Wharton’s three-year-old Program for Social Impact. He’s focused on how to keep businesses in Philly, particularly in the face of new wealth coming out of Silicon Valley, and its pull on top technology talent.
“To grow Philly, you need mentors and you need good talent, and then you need financial resources,” says Lodish. “There are plenty of really good students who are exposed to these concepts. A number of them get started, and we just need to make sure they stay here.” Warby Parker, the Philly-founded buy-a-pair, give-a-pair eyeglasses company launched by Wharton grads, is among those that have moved to New York.
Jay Coen Gilbert, the AND 1 sneaker tycoon and a co-founder of the Berwyn-based B Lab, is hopeful that advocacy and government intervention can help stanch that kind of loss. He notes that Philly offers the nation’s first city tax incentive for certified B Corps, a $4,000 break. Already, he adds, “Of the 530 B Corps in the U.S. and Canada, 48 of these are located in Pennsylvania.”
City cooperation has already proven critical for startups like NovaThermal, which recently partnered with the Philly Water Department to build a demonstration site for its technology, a sewage-powered geothermal HVAC system. “It could heat and cool an entire downtown based on an existing sewage loop,” says founder Elinor Haider. The system is taking off in China, “but the real barrier to entry in the U.S. market was not having a U.S. reference project.”
What’s left, then, is to convince Philadelphians that they have what it takes. Philly has always had a culture of innovation, according Nicholas Torres, co-founder of the Philadelphia Social Innovations Journal. That’s beginning to coalesce into a community. (The journal now attracts 150 to 200 participants to its quarterly conferences.)
“In Philadelphia, you have some well-respected national models, but if you ask locally no one really knows about them,” he says. “What we’re missing … is just a place where people can understand what is happening in Philadelphia in the social sector.”
But that, he believes, won’t be the case for long.