In which Carrotmob switches back to a for-profit model.
In the aftermath of the shocking events of Chapter 7, we were committed to pushing forward with Carrotmob, but we had to rethink our approach.
People would say to me: “If Change.org and Care2.com can pursue this lead generation revenue model, why can’t Carrotmob?” Well, both Change.org and Care2.com are for-profit companies that make millions of dollars each year, and they aren’t restricted by the limitations of being a non-profit. They do a great job of achieving their mission and having a big impact, even while they operate as businesses. Hmmm.
People would say to me: “Wow, you found out you can’t do what you planned as a tax-exempt non-profit? Does this happen often?” Well, as a matter of fact, the same thing recently happened to another prominent organization. In 2011, after a number of years applying for 501(c)(3) tax-exempt status, Couchsurfing.org found out that the IRS would not grant them status because they didn’t fit the definition of charitable. Couchsurfing felt that their mission of advancing cultural exchange was a charitable purpose. The IRS presumably felt that for a lot of people the purpose of Couchsurfing was actually to save money on hotels. Or something like that. So after years of trying, they too found out they couldn’t be a tax-exempt non-profit. How did they respond? How did they manage to keep going and push forward their mission? Well, they switched to a for-profit model, raised $7.6 million from investors, and they are now positioned to thrive within their new for-profit legal structure. Hmmm.
In which Carrotmob discovers that they cannot legally pursue their plans as a non-profit organization.
Let me pause this story and share a little about the revenue models we had been developing. Carrotmob creates value for a lot of people, and there are a number of different ways that we could monetize Carrotmob campaigns. At the end of 2010, we had not yet started pursuing a revenue model or making any money, but we had three revenue model ideas which we were most interested in pursuing in the future:
1) Take a cut of all spending
It’s just so clean, so simple. We would have different ways of facilitating purchases for Carrotmob campaigns, and we would keep a percentage of all the money that would flow through. Groupon takes a cut from merchants, Apple takes a cut from developers, Kickstarter takes a cut from project creators, eBay takes a cut from sellers… a classic model. People would buy things at the normal price, but we would take some percentage out of what the businesses would normally receive. Then we would use that money to create more campaigns, scale our impact, etc.
In which Carrotmob incorporates as a non-profit and is finally able to develop a master plan.
In February 2010, we had just successfully gotten One Block Off The Grid the rocket fuel it needed to thrive. However, there was no rocket fuel available for me and Carrotmob. I was completely exhausted, and coming off what was probably the most stressful few months of my life. I really needed a break and a deep breath. But we had paid ourselves zero salary during 2008 (just a $1000 holiday bonus), and $43k in 2009, so now that I was unemployed with very little savings, I didn’t have the financial freedom to take a break. I just kept working non-stop. Right off the bat I recruited Sarah Zisa to join the team as Carrotmob’s Director of Community. She helped me craft our plans and managed all the inquiries we would get from Carrotmob organizers around the world. On April 22, 2010 (aka Earth Day #40) we incorporated Carrotmob as a non-profit. We switched from a for-profit model to a non-profit model mainly because we had no business plan, no revenue model, and we were in no position to raise money from investors, but we did have a great story about potential social impact which would allow us to raise money from donors relatively quickly. The good people at Cooley LLP were kind enough to join as our pro-bono law firm. My phenomenal friends John and Liz were kind enough to join our board. The good people at The Rose Foundation were kind of enough to become our fiscal sponsors so we would legally be allowed to receive tax-exempt donations. Organizers around the world kept creating campaigns which kept us inspired. And we had three major donors who each gave us critical financial support, starting in the summer of 2010: Jim Sandler, Michael Dearing, and Ezra Callahan.
In which Carrotmob wanders the desert, spending 6 months with very little support.
In the summer of 2009 we were dealing with the strain of trying to juggle many different projects, but it was also a whole lot of fun. We had built quite a team! We had an awesome office at 164 South Park (which has also been home to Twitter, Get Satisfaction & Instagram, among others), and every week we would all eat lunch in the park and frequently talk about what kind of company we wanted to be. We brainstormed crazy ideas, and debated all sorts of questions: Should our projects all work together, or be thought of as separate? Should we plan to acquire new projects or build them in-house? What sort of incubator do we want to be? What sort of funding mechanisms would be most helpful? When will we expand beyond environmental issues and do projects related to poverty, education, social justice, etc? Should we experiment with other legal structures, like non-profits, B Corporations, L3Cs, Co-ops, etc? Lots of movers and shakers in the social enterprise field would stop by and join the conversation. We had a couple big parties, because that’s how we liked to roll. We had more than one “mid-life crisis” as a company. But mostly, we worked hard on One Block Off The Grid.
In which Virgance quickly grows to pursue many projects and we investigate various paths for Carrotmob.
Now that all the “housekeeping” of starting a company was finished, it was time to get down to business in early 2009. We had several projects to juggle within Virgance, but Carrotmob was off to a great start! We began to see more and more campaigns happening around the world, created by local community leaders. We worked directly with many organizers, and developed basic tools and materials to help them out. We redesigned the Carrotmob website, launching city-based blogs and gave local organizers administrative control over their city’s blog to use as an organizing tool. We put together our famous cartoon video. But the key to really making Carrotmob go big was getting a revenue model in place. We couldn’t really invest in hiring people without that. We had about two dozen ideas floating around, and during the first half of 2009 we researched them and identified some promising models.
In which Carrotmob becomes part of an incubator company called Virgance.
Once it was clear that Carrotmob had legs and wasn’t going to be a fluke, I knew that I was going to quit my other job and run with it. The problem was, I needed help. I didn’t know anything about how to start and grow an organization. I started having lots of conversations, and soon I was introduced to Steve Newcomb. He had been thinking about some related concepts and started pitching me on the concept of Virgance. The idea was essentially to create an incubator company that would build projects which were at the intersection of business and sustainability. Steve and I each represented the two roads that led to that intersection. Steve was a business savvy serial entrepreneur (his prior company was about to be sold to Microsoft for many millions of dollars), who had recently become interested in sustainability, and I was a long-time advocate who had recently become interested in entrepreneurship. We each complemented each other in the areas where the other person was clueless. It became clear to me that if Steve was involved, Carrotmob would be able to go places much faster than if I tried to do it on my own. But his idea was also very new and different from what I had imagined. I had sort of assumed that Carrotmob would be a non-profit. Not for any good reason, but just because I had a simple-minded perspective that organizations that did good were non-profits. Steve was proposing a for-profit, and that was a new idea for me. To help evaluate the opportunity, I took it to the mob. I wrote a blog post in which I laid out the rationale for making Carrotmob a part of Virgance, along with all the potential downsides of that path. I asked everyone to consider what would be best for the Carrotmob movement and vote by commenting in the blog post. The comments streamed in, and over 2/3rds recommended becoming a for-profit. That made the decision for me, and Steve and I co-founded Virgance in late Spring 2008. I left my other job shortly thereafter.
In which the Carrotmob idea is developed and tested for the first time.
Once I had come up with the seed of the Carrotmob idea in spring 2003, it took five years to really develop. At first the idea was half-baked. Just an vague impression of something that needed to exist. Later that year I was on a road trip and I came up with the name. Then every six months or so I would be in the shower and suddenly think of some twist: “Hey this Facebook thing was just invented…I wonder if that would be a good way to get people together…hmmm.” In 2005 I sketched the logo. Meanwhile, I worked in Lake Tahoe, worked at Google, and directed a documentary film. I would say that the idea developed gradually, much like Steven Johnson’s description:
In late 2006 I had been working for The Go Game for about a year, and as much fun as that job was, I decided to get serious about Carrotmob. My main hesitations were two things:
In which Carrotmob founder Brent Schulkin offers a personal reflection on how and why the Carrotmob idea came to exist.
I grew up in Northern California. Those of you who were hip to the children’s literature scene in 1990 no doubt remember the quadruple platinum blockbuster hit, “50 Simple Things Kids Can Do To Save The Earth.” I was 9 or 10 when I got my copy, and it was on fire, at least among the 9 year old intelligentsia crowd who was looking for something more meaningful than “Where’s Waldo?” books. I mention this book because I think it made an impression on me. It’s a trivial footnote to the story, but I believe a seed was planted then, grew without my knowledge for another decade, and finally bloomed into an interest in “save the world” advocacy once I got to college.
In college I developed an interest in how societal systems worked, and got really curious about how we might change systems that weren’t working well. Meanwhile I developed a voracious appetite for learning more about all sorts of social and environmental issues. As I grew to understand the scale of certain problems, and the causes of those problems, I started experimenting with different ways to drive change. I took a tour of the classic methods used by the world’s changemakers: Petitions. Boycotts. Educational film screenings. Marches. Protests. Stuff like that. It generally felt good to be *doing something,* but sometimes it also felt dumb, naive, ineffective, and doomed to failure. I had passion. I had my values. Usually I even knew what I wanted. But I didn’t have methods that I was happy with.
As I looked at the roots of all the problems in the world, I began to see powerful businesses at every turn, and it became very easy to blame businesses for all the world’s ills:
OK, it’s time. We’ve just launched some basic tools to create your own Carrotmob campaigns, and now we are finally in a good position to make the Carrotmob vision a reality. Starting now, we’re going to share everything that has happened since the origin of Carrotmob, and then everything that we’re planning for the next few years. Get ready!
How our new tools can help you create a Carrotmob campaign
We’ve just launched a new section of our website to help you create campaigns. Here’s an example of what your experience might be like as you use them:
First, you can watch an intro video which explains the basics….
Most likely you will want to learn more before starting a big project like this, so we’ve written up a detailed “resources” page that describes everything that goes into creating a campaign…
Some of you will read this whole thing right away! The rest of you will get restless and click “Start a Campaign”.
Then, in case you have gotten the wrong idea, we ask you to agree to a few basic guidelines, such as “I will not attack a business.” Basic “need to know” stuff.
Next, you arrive at your organizer dashboard! First, you need to figure out the basics of your campaign. Who is going to plan this campaign? What will you ask a business to do? We’ve created a document to help guide you through this process…
