Bud Colligan: Social Enterpreneur

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Bud ColliganLots of college students have part-time jobs. When Bud Colligan was at Georgetown University, his part-time job was founding Vital Vittles, which grew into one of the largest student-owned businesses in the country.

It was a sign of things to come. Bud was part of the original Macintosh team at Apple. He went on to lead Apple’s higher education marketing. He became the CEO of Authorware, and then co-founded Macromedia, which was acquired by Adobe Systems for $3.4 billion. He’s on the board of Lynda.com, [Correction: He was an investor and lead independent directory of Lynda.com] and was an investor and board member with CNET Networks. And that’s just part of his bio.

For some time, Bud Colligan has been focused on venture investing — especially in ventures that promise to achieve social good, such as through education, or environmental protection, or inclusive economic development. One example is Pacific Community Ventures, which he co-founded and where he helped raise $100 million for community-focused investments. Another is the Monterey Bay Economic Partnership, a coalition that’s helping to build sustainable economic growth in his part of California.

This episode is a fascinating conversation on the potentially transformative impact of business beyond the bottom line.

Bud Colligan

Bud Colligan is Co-Chair of Monterey Bay Economic Partnership. He is the Founder and CEO of South Swell Ventures, an early stage venture capital firm focused on technology investments in the Monterey Bay region. Mr. Colligan founded Central Coast Angels in 2013 and is a founding board member of Santa Cruz Works. He is an investor in and advisor to NextSpace, PredPol, PayStand, EdSurge, Water City, InBoard, Wheelhouse and Tixr. Previously, Mr. Colligan was on the original Macintosh team at Apple, ran Apple’s Higher Education Marking Group, was Chairman & CEO of Macromedia, and Partner at Accel Partners, a leading venture capital firm. Mr. Colligan’s successful investments include lynda.com, CNET Networks, Days of Wonder, Yodlee and Brightmail.


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[00:00:00] Spencer: Dastardly Cleverness in the Service of Good is produced by Boots Road Group, a marketing firm for organizations that make impact. Boots Road Group creates branding, campaigns, and content, including websites without limits. More on Boots Road Group at BootsRoad.com.

Welcome to Dastardly Cleverness in the Service of Good, the podcast for people who make progress. I'm Spencer Critchley. Business drives our economy -- but our guest this episode thinks it can also make society better. Bud Colligan has been part of some of the most successful businesses of our time, including Apple. He's also a social entrepreneur. Bud Colligan, this time on Dastardly Cleverness in the Service of Good.

Lots of college students have part-time jobs. When Bud Colligan was at Georgetown University, his part time job was founding Vital Vittles, which grew into one of the largest student-owned businesses in the country.

It was a sign of things to come. Bud was part of the original Macintosh team at Apple. He went on to lead Apple's higher education marketing. He became the CEO of Authorware, and then co-founded Macromedia, which was acquired by Adobe Systems for $3.4 billion. He's on the board of Lynda.com, [Correction: He was an investor and lead independent directory of Lynda.com] and was an investor and board member with CNET Networks. And that's just part of his bio.

For some time, Bud Colligan has been focused on venture investing -- especially in ventures that promise to achieve social good, such as through education, or environmental protection, or inclusive economic development. One example is Pacific Community Ventures, which he co-founded and where he helped raise $100 million for community-focused investments. Another is the Monterey Bay Economic Partnership, a coalition that's helping to build sustainable economic growth in his part of California.

I had a fascinating conversation with Bud recently about what he sees as the potentially transformative impact of business beyond the bottom line.

You can find notes, links, and a transcription of this episode at DastardlyCleverness.com. And if you like, please remember to give it a rating on iTunes or wherever you listen. It really makes a difference here.

Now is my interview with Bud Colligan. Bud, thanks so much for joining me.

[00:02:15] Bud: I'm glad to be here with you, Spencer. Thank you.

[00:02:18] Spencer: Bud, you're someone who's really hard to sum up in a few words. How do you describe yourself when somebody asks you what you do?

[00:02:25] Bud: I think of myself as a social and business entrepreneur. Business has been such a vital force in our economy. It provides jobs and culture and goods and services to the world community. And I've happened to have a career in business, mostly as an entrepreneur. So I see myself as an entrepreneur, one who is very much a creator. I like to start new things. I like to identify opportunities and start something around that opportunity and build it. And those skills have led me to look at our community as a whole, our society as a whole and say, "Where can these same sorts of skills and attributes be applied to the public sector?" And so I've been an activist, and a sort of social entrepreneur as well, in trying to create organizations that give back, that provide needed community services, and that can be dynamic and not just charitable organizations, but ones that can attract resources from other sectors and therefore be sustainable in the long term.

[00:03:54] Spencer: Was this something that always appealed to you? This combination of social impact with building successful businesses? Because looking at your bio I see that even when you were in college at Georgetown, you were doing things that seem to point in this direction.

[00:04:10] Bud: I think the seed that somehow I got at Georgetown and there afterwards. My father was a small business person so I kind of watched him and various companies that he was involved in. These were all small companies, less than $5 million in annual revenue. But I saw him do that. He was definitely kind of an entrepreneur as well, in that sense. He didn't start things but he would go in when companies were small, so maybe I had a gene or two from my upbringing. But at Georgetown, I was very much focused on student activism. It was the wind down of the Vietnam War. A bunch of students had started this organization, called Students of Georgetown, Inc., not just to start businesses, but to provide services to students. Our first service was a bus service to bring students that lived off campus to campus. And we had a travel service for spring break and a record co-op when there were still vinyl records. And so an outcropping of that was this new business called Vital Vittles, which has become the largest student-run business in the United States now. So I guess I approached it more from the standpoint of small business and activism and those qualities have just kind of run through my life. After business school, I went to work for Apple Computer and was involved in the creation and marketing of the Macintosh. And so I saw Steve Jobs in action, and that just lit that fire of gosh, one can really create something; one can do anything one sets his or her mind to. So why not me? Why not now? And then applying that both to a business context as well as to the social issues of our day.

[00:06:17] Spencer: Yeah, historically and boy, that is really a piece of history that's had so much impact. But historically, that's so interesting that there was this cohort of people coming out of the sixties that saw business as an opportunity to change the world when so many young people were rejecting business. Is that the way you saw things?

[00:06:40] Bud: I've always felt that business is a very dynamic force. Unfortunately, I think in the last twenty years or so, capitalism has run a bit amok. And maybe in a historical context, if you go back to the large oil companies and the railroad robber barons and so forth, people of those generations would say the same thing. Maybe there's something fundamentally flawed about capitalism, but I've always viewed business as a very dynamic and positive force. It is a job creator. Most people you know, you ask them what they do, they think about themselves in terms of their profession. Their job, right? Whether it's in education or the non-profit sector or a profit-making business, they think of themselves as a, as a professional or, in some cases, as a worker in one of those businesses. So I think where we've gotten off-track a little bit with business is not really understanding and taking into consideration the externalities that businesses create. And you could look at oil companies and say, "OK, what happens with the air as a result of all of us burning all these fossil fuels?" The same thing with car companies or sugar drink companies. What about the epidemic and obesity that we have in our world? And as we export our fast food and soft drink businesses to other areas of the world, all of a sudden you see an increase in obesity and heart disease and so forth and so on. So, I have been searching, and I'm still searching, I think this is more something that happens in the political sphere — think cap and trade or buying and selling carbon credits is an example of this. We really need to figure out a more holistic way of dealing with the externalities that are created by businesses because the pure pursuit of profit usually does not lead to the best societal outcomes. Even though there are good jobs created, there might be good products and services created, but it's the role of our government and of our politics to really understand and put the regulations and the guideposts on businesses so that the externalities created by profit-making businesses are fully taken into consideration.

[00:09:08] Spencer: Yeah, you know, I often think of it, it's a form of just honest accounting because externalities, they're the things that you're not tracking on your balance sheet in your income statements, but somebody else is, you know, somebody else is incurring those costs. And, I guess, you know, Michael Porter quite some time ago came up with the balance scorecard as one approach to trying to actually bring environmental impact, social impacts, that sort of thing, onto the balance sheet.

[00:09:37] Bud: Right? And we're seeing the exact same thing with social media right now. You know, what is the cost to our democracy? What is the cost of the debasing of our public discourse? I think these are real costs. They're more intangible in some ways than being able to calculate carbon credits or the increase in obesity and correlate it with an increase in the soft drink industry. But you know these are real things. And so, you're right — I think there have been various approaches proposed and, of course, there are political approach is all the way to regulation, for example, regulating our social media platforms. Europe has much stricter stricter regulations around privacy, for example, and also hate speech. So, you know, I think some of these things are going to need to be regulated in the United States as well.

[00:10:39] Spencer: And it gets tough, of course, the moment you run into values we hold dear like free speech. But sometimes we have to, we just have to wrestle with these things, even though they're tough channel challenges and somehow balance our desire for freedom and privacy and for free markets against all these other impacts.

[00:10:56] Bud: Right? It's a balancing game, and that's what politics is all about.

[00:11:00] Spencer: Right? You have done so many things that show you putting this kind of thinking into action, I would say. Having succeeded with companies in Silicon Valley like Apple and Authorware and Macromedia and then becoming an investor and backing startup companies and also social-type startups. And I wonder if we could look at a few different areas and see what unites those different approaches because I think you've been able to apply some of this thinking in various different realms. And one of them that you're very active in lately is regional economic development around your hometown now of Santa Cruz, California, in the Monterey Bay region. You have the Monterey Bay Economic Partnership. And you've also been involved in a co-working operation called Next Space and digital technology non-profit for young people called Digital Nest. How do you see regional economic development in bringing these often tech-oriented businesses to your region? And what do you see as the potential there?

[00:12:04] Bud: Well, when I moved full-time to the Monterey Bay region, I've been here since 1996, so about 22 years part-time and then moved here full time in the 2010 time frame. One of the things, of course, I came from Silicon Valley, so one of the things I saw was the mismatch in terms of housing prices and transportation costs and costs of living here in the Monterey Bay region with the kinds of jobs that we had here and the kinds of jobs that we wanted here. For example, there's a big focus on the environment. We want to breathe clean air. We have the beautiful Monterey Bay Sanctuary. We have beautiful forests within a ten minute drive away. So all of these things are extremely important and valuable to our community. At the same time, we have mostly been leveraging those assets with very low paying, you know, tourist industry and, to a certain extent, the agriculture industry as well. So my focus was on what could we do to diversify the economy, make it more stable for the long term, but also focus on more knowledge-oriented jobs, whether they be in marine science in agriculture, in ag-science, ingenomics, in tech, in software, in consulting, in design businesses that, with the Internet, could be worldwide businesses. They might be physically located here, but the Internet all of sudden gave us the capability of having those kinds of businesses located here but serving clients all over the world. So I guess the fundamental thing I saw was we need more good paying jobs here in order to sustain this high-cost of living or just to be able to afford this high-cost of living which exists in the region, some of which is obviously influenced by this huge trillion dollar economy over in Silicon Valley. But also it's influenced by the desire for people to wanting to live here and who are already here, let alone migrating to this area. So...

[00:14:31] Spencer: And just to draw the picture for people who might not be as familiar with the geography Santa Cruz and Monterey and the Monterey Bay, or just over the coastal mountains from Silicon Valley. It's kind of, ah, gorgeous, in economic terms, it's traditionally been a gorgeous bedroom community for a lot of people who would be commuting from. The Santa Cruz area, for example, over, threw these mountains over the notorious Highway seventeen, which is beautiful but also life-threatening during rush hour and into Silicon Valley. I was one of those people. I lived in the Santa Cruz area for a number of years and commuted into Silicon Valley, and what you're describing is taking this region that was traditionally tourist-oriented and agriculture-oriented um, with some other some academic institutions in Marine research as well and trying to use the modern technical advantages we have with the Internet and high-band within all that to try to bring some of those jobs, some of those technology- and knowledge-oriented jobs over to the coast.

[00:15:32] Bud: right? Because the people are living here already there, just getting into their car and community over Highway seventeen, which connects Santa Cruz and San Jose. Or they're going up Highway One, a One, which connects cities like Salinas and Watsonville to a certain extent, up to San Jose as well. So it wasn't a desire to get rid of agriculture tourism, which will continue to be two, you know, mainstay industries. But both of them pay low wages. And so my concern was saying, How can we take the people who already live here and provide opportunities locally so we can reduce our transportation footprint? Not really increase the need for housing because a lot of the people already live here. But our commuting out every day give people a better quality of life because you're not spending two or three hours a day on the road and enhance our ability to build a thriving community. When you look at the the number of jobs in this area and you look at the biggest employers, who are they? They're the educational institutions like CSUMB and UCSC and Cabrillo and Hartnell and Monterey Peninsula College. They're the healthcare organizations like CHOMP and Salinas Valley Memorial and Dominican and Watsonville Community Hospital and PAMF [Palo Alto Medical Foundation].

[00:17:02] Spencer: CHOMP, for people outside the area, is Community Hospital of the Monterey Peninsula.

[00:17:06] Bud: Yes, and, and so and then you've got the tourist industry, which is very diffuse restaurants, small hotels. We don't have a whole bunch of huge hotels and conference centers and so forth. And then a very thriving agricultural community based on berries more in the Watsonville and Pajaro Valley area and going down. Also strawberries, but also all of the green vegetables that come out of the salad bowl of our country, which is the Salinas Valley. So this whole focus of mine, starting Santa Cruz, works on and taking the lessons that we've learned in the tech community and Santa Cruz and applying them to Salinas Valley, supplying them to the AG tech area, applying them to Monterey, applying them toe Watsonville through digital nest and also a lot of other things around co-working spaces and engineering graduates and having tech reporters and that sort of thing. Business plan competitions, etcetera. A lot of that stuff was, too try to engender. Try to kick start a thriving science and technology community around the Monterey Bay region.

[00:18:26] Spencer: And you mentioned AG Tech is part of that, and that's something that I've been involved with. As well, and just for disclosure purposes, one of my clients is the city of Salinas, which has a very ag-tech focused economic development strategy. And that's one element of many things that you mentioned. And that reminds me that really, this is an ecosystem approaches. And it's not just one thing that transforms a regional economy.

[00:18:52] Bud: Absolutely. And that that you mentioned the Monterey Bay Economic Partnership that was the focus of the formation of the Monterey Economic Partnership back in 2014. First of all, it was a public private partnership, recognizing the fact of what we discussed earlier-- that it can't just all be about business and economic development. It has to be about healthcare and equity and education and the environment, etc. So those two things combined, getting business in public policy on the same page, but also recognizing the fact that we do live in a holistic economy, a diversified economy, and there are many you know you talk about company towns, for example. They're relying on one single industry. And if something happens to that single industry, the town doesn't do very well, and our area's really ag and tourism. So what can we do? I saw the fact that we have about 26 different marine science organizations around the Monterey Bay region, right, from the leaders like the Monterey Bay Aquarium in the Monterey Bay Aquarium, Monterey Bay Research Institute to the Marine Sciences Institute at UCSC Longs Marine Labs, Stanford has a facility down in Pacific Grove, etc. You know, what can we do? There's a lot of science there. What can we do to build more businesses from that science research? The same thing, we have a world class genomics, ah, research academic endeavor at UCSC, in Pediatrics, you know. They were the first organization to publish the human genome on the Internet, making it public so that wasn't a private enterprise. So a lot of good talent is there, and a lot of science is coming out of there. What can we do to commercialize some of that science? And it's happening now. So. a lot of these things were just recognizing where are our strengths and what can we do to leverage of strengths into the kind of clean, sustainable economy that we want in the future?

[00:21:19] Spencer: And this is something that people in this region have been talking about for quite a while, perhaps not making as much progress, even while I think a lot of people saw the benefits of doing the workforce development, bringing in the educational institutions, identifying the regional strengths and thinking about how those could be leverage for the future. For example, our former Congressman Sam Farr was very big on this idea of uniting the region around these themes for regional economic development. But it really seems to me that it's been accelerating the past few years, and you and the economic partnership in these other ventures you've been involved with are a big part of that. What's your perspective on what seems to be driving this forward now?

[00:22:06] Bud: I think Sam Farr had a very good vision for the region. I believe it was more of a political vision because those are the levers that he had to work with. You know, what kind of federal grant or what kind of state grant could come to the region to facilitate some of that? Ah, good example is is the Monterey Bay Sanctuary Scenic Trail. It was his vision, and it's, you know, been sort of coming together for a long period of time. But when you rely wholly on public Resources is and public means to make something like that come together, it takes enormous amount of time. So of yes, I think it was heading in the right direction. The vision was there, but I think the dynamism of the private sector's is important and even something that could accelerate it. more is when the public sector and the private sector work together. And so, for example, Rene Mendez, who's the City Manager of Gonzales, is my co-chair at the Monterey Bay Economic Partnership for exactly that reason, and at every board meeting we talk about both things. We talk about what's happening on the public sector, what's happening in the private sector and so that interchange, that exchange of knowledge, I think it's extremely important. Um, I don't think it's, ah, it's a secret, Spencer, that the world has been moving in this direction in the last 10 to 15 years, as people saw the economic value created in Silicon Valley, you've had places like Austin and Seattle and Portland and Washington, see in Atlanta and Minneapolis and Denver, many other cities figure out, what can we do to leverage our resource is and build these more knowledge oriented industries that heir the future in our in our region or in our city or in our county? And so the Monterey Bay Economic Partnership was recognizing that trend and trying to bring both the public and private sector together and really organize the resources that we have and point them in one direction. Yeah, a good example you sometimes is is around technology transfer in science and technology at UCSC, the University of California, Santa Cruz. When we started this effort five years ago, there was, I think, one vice chancellor in charge, Scott Brand. But George Blumenthal, the chancellor of UCSC, recognized this at the same time, he agreed to be on the board of one of the first board members of the Monterey Bay Economic Partnership. He got UCs involved in Santa Cruz works. He provided the funding in his own University to staff an Office of Technology Transfer and various other positions so that Scott Brandt really had a department. And then the state, at the same time under the leadership of the UC Central office over in Oakland and Berkeley, decided to give each University of $3 million grant for entrepreneurship and, funding startups and so forth. And so, you know, when you get an increase in computer science and science grads, you get technology transfer happening. On a more formal basis, you get the proper staffing you get. University Resource is getting integrated into nonprofit in public and private sector organizations with the same goal, so that leverage occurs. You see the hack-a-thon grow and you see business plan competitions of places like CSUMB and so forth. You know, a lot of things start moving in the same direction. You brought up AG Tech as well. There was a a seminal effort led by Ray Corpuz, a city manager, and and you were involved, in John Hartnett and the Western Growers Association, all those things, the Forbes Ag Tech Summit, all of those things combined. You know, for the first few years, it looked like very small steps, very little progress. And then all of a sudden, all of that investment sort of mushroomed into a growing AG tech sector and a growing Ag Tech focus in in Salinas and in Monterey County. On, we've tried to again incorporate some of that, learning into Watsonville into Digital Nest into the activities that we do. They're so that cross fertilization, I think, has been extremely important, and also extremely important has been getting institutional organizations on the same page as business and all pointing in the same direction.

[00:27:10] Spencer: Again, he ecosystem approach, And I think you describe it really, really well. It's not just one thing. It's it's maybe a vision that unites it. But all of those things coming together that need to be specific for the region, right? You can't just replicate what happened in Silicon Valley somewhere else. You need to work with what you have locally. And you mentioned Rene Mendez, the city manager in Gonzalez and Ray Corpuz, the city manager in Salinas. And Gonzalez is a very small town, but they think big, and Salinas is kind of a medium-sized town in the capital of this giant agriculture region. But I think one of the things that impresses me a lot is people like that, people like you, a lot of the folks involved in this effort are trying to make it really trying to make it work for everybody. You mentioned early on how one of the problems we have with a lot of the high tech success is coming out of Silicon Valley is sometimes they you're going to create billions of dollars for some folks, but they can be really disruptive to the lives of a lot of other folks. So with efforts like Digital Nest, for example, or what the City of Gonzalez is doing as a farming town in Salinas Valley, they're really trying to make this inclusive of kids who come from farmworker families. In a lot of cases, Ah, who in the past might not have seen a big future in some of these fields. But now, thanks to efforts like Digital Nest and some of these other things that are happening, maybe they do have a better chance.

[00:28:38] Bud: Yes, absolutely. As I mentioned earlier, a key component of the Monterey Bay Economic Partnership was this holistic approach-- equity, affordable housing, affordable health care, uh, education for all. So trying to figure out ways in which we can make sure that this region, which has a, as you know, a very democratic ethos of it, is different from kind of a secular approach taken more, I think, in Silicon Valley, that's been a very one of the most satisfying things that I've been involved in is the creation of Digital Nest. And again it was a it was a social venture. It was an entrepreneur, Jacob Martinez, who came to me and talked about what he wanted to create. And I worked with him on the business plan and and I was able to fund the first part of it to get it off the ground and continue. And now I'm on the advisory board. Something like that, where you're providing opportunity to kids of in farmworker families and allowing them or enabling them to see their potential, to see a much bigger world that is open to them through education and the network that a place like Digital Ness provides. That's really satisfying. And I think those efforts to Ag Tech, the Coder Dojo program now that Hartnell has taken over teaching kids to code at all levels in Gonzales, in Greenfield, in Salinas. That that, I think, is if we have any legacy after all of this is done, it will be providing opportunity, too. Everyone making sure that the opportunities that are there in education are available to the least as well as the most.

[00:30:46] [AD]: Dastardly Cleverness in the Service of Good is produced by Boots Road Group, a marketing firm for organizations that make impact. Boots Road Group creates branding campaigns and content, including websites without limits. More at BootsRoad.com. Now back to our interview with Bud Colligan.

[00:31:00] Spencer: The success that you see from some of these kids, too, is really inspiring, isn't it? Like NASA has a program as well with Hartnell College, which is in Salinas or the kids in Gonzalez, and another disclosure City of Gonzalez is another client of my firm, but I would be super impressed by these people anyway, and you see how well so many of their kids are doing just given the opportunity.

[00:31:31] Bud: Yes, there's no dividing line in terms of brainpower between low-income and high-income kids. It's just really a question of the level of education and resource is. They have from an early age through elementary, middle and high school. And we're seeing incredibly bright kids out of Digital Nest go to places like Adobe and Google and Linkedin and so forth in, in terms of careers in Silicon Valley that they're also going to organizations here-- farmer organizations and agricultural organizations that need marketing and IT services in their own companies like Tanimura and Antle and Taylor Farms and so forth. So you know, a lot of these kids are very interested that come from, uh, this community, from Santa Cruz County and Monterey County, they're interested in giving back in their community and they may go away for a few years and get some experience but a lot of them come back and a lot of them want to stay here as well. So the fact that we have organizations, whether they be farm organizations of marine science organizations or are increasingly growing tech sector here, there are opportunities here locally as well.

[00:32:56] Spencer: And education has also been a theme for you. We've been talking a lot about economic development here, and education's a key part of that. But as I mentioned earlier, Authorware was one of the early successes in your career and you have stayed involved in education. Can you tell me a little bit about that part of your work?

[00:33:15] Bud: Sure, just through luck I got involved in education. I ran Apple's higher education marketing group for three years. And that led to being the CEO of Authorware, which was an instructionally-based authoring tools company and that led to Macromedia, when we merged Authorware and a company called Macromind Paracom together and renamed it Macromedia. And that led to my investments in companies like that EdSurge and Lynda.com, which were also educationally oriented. So I guess the seed was planted at Apple, and I just continue to pursue it because I ended up knowing a lot about education and how technology is used in education and over the last 35 years or so what I have come to believe one is I felt like I got a really good education, places like Loyal High School in Georgetown University and Stanford University so I was a big believer in the power of education, but more importantly, as it related to forming organizations, whether they be social or nonprofit, or or for profit organizations. What I saw it was that it was much better to give people the tools to succeed rather than just giving them a charitable contribution or something like that. And so I have felt that, you know, the old adage of "teacher person fish is much better than giving them a fish," give them the tools. I'm not in favor. I do believe that there's a role for philanthropy, and I'm my wife and I are big, uh, givers, to nonprofit organizations in our area. But I really believe that the best thing is to create organizations, create individuals who have skills that they can grow and sustain, and also create organizations that have a business model, whether it be a nonprofit or for profit that can grow and be sustained. Because, you know, one of the biggest challenges that at Digital Nest, one of the biggest challenges for the Monterey Bay Economic Partnership is what's the model that this organization will be long lived, and we'll have a successful trajectory in the future? If it's one hundred percent on donations, that's not a good model, right? So at in the case of Digital Nest, is it integrated with the education system? Uh, is it talking to the big corporate and foundation philanthropic sources? Does it have an earned income element of its business model? Doesn't have ah, a wide base of donations from both grassroots and larger donors. So when you get a holistic view like that, you're going to get a good organization that could sustain itself. And with the Monterey Bay Economic Partnership we said the same thing from the beginning was, you know, our donation, our membership structure is going to be different from other nonprofits, that are having a hard time making it in our community and over time, then, we've supplemented that with foundation support, with conferences and so forth, so that the organization has multiple sources of revenue. And so I really believe in the model. I really believe in sustainability. I really believe in giving people the tools to succeed through education and training, because ultimately those could be taken anywhere. No one could take your education away from you.

[00:37:11] Spencer: That leads me to want to ask you about your role in impact investing with ventures like Pacific Community Ventures, South Swell Ventures, and the Opportunity Fund. That sounds like it grows out of exactly what you were just talking about.

[00:37:25] Bud: Yes. After Macromedia, I I asked myself, Why can't we apply this venture model more to businesses and low-income communities. And the response I got was that, you know, in a tech venture you can get, you know, one hundred acts on your investment, but in a restaurant or a cleaners or landscaping business, you know, more mainstream, businesses, you're not going to achieve that same kind of multiple. Maybe you'll get your investment back in a good case, maybe learn two or three times your investment, and that can't pay for all the failures that you're going to have, because that's why they call it venture investing. You know, if you it makes one hundred investments and eighty of them don't do that well, or maybe you get capital back and some etc. but five or ten do spectacularly well, it pays for a lot of misses. And so the idea is to keep keep trying things. Failure is okay as long as you fail fast and your good deals do well. I learned that that that was partially true in impact investing. The venture model turned out to be less successful, not saying can't be successful, but it's certainly less successful than mainstream venture investing. But the loan model has turned out to be quite quite good in low-income communities. And that's why Pacific Community Ventures has moved out of venture investing and more towards loan Investing and opportunity fund with micro loans now has been going on for almost, let's see, like 25 years and has become the largest microloan provider in the United States. From a, you know, Ah, young man Eric Weaver, who left Stanford Business School and had this idea and started it up, is a one or two person organization back and 1994,'95 timeframe. So, uh, I think that the loan model is really powerful. It's really powerful in disadvantaged communities, more than 50, 60% of opportunity funds loan recipients are women or entrepreneurs of color, and I'm really proud of the work that they do. They really transform lives. The same model, of course, has been used in in Africa lot, with very, very small micro-lending focused mostly on women entrepreneurs. But bringing that capability over to the Monterey Bay Region has has been really transforming for tens and hundreds now businesses in this region. So I think organizations like Opportunity Fund and Pacific Community Ventures really, really do make a big impact.

[00:40:34] Spencer: That's such a simple but important idea. I think people fall in love with that, you know, 100x type model from Silicon Valley and think that's what we need to transfer to other communities. And sometimes sure. But on the other hand, lots of really important businesses have low profit margins, and we don't consider them to be failures. You know, like a grocery store I understand might be in the neighborhood of 1-3% or something. In lots of businesses, 10 or 15% is fine. It's considered to be a successful businesses, long as you could do that reliably. And what you're describing, I think, is another example of, in this case, positive externalities. Because if one of these businesses is not going to turn into the next Facebook or Google, that's not a bad thing. If it's creating decent jobs and buying services and products from other local vendors, and it's sustainable over the long term, right, that's how you build a healthy community.

[00:41:32] Bud: That's exactly right, Spencer him. Don't don't forget the transformative effect that it has on families. That's what I get, really excited about when you have an entrepreneur that switches from a, you know, sort of mainstream, low-paying job. And just take in Watsonville, the kitchen incubator they have there. They're spinning out new food-based businesses making chipotle or different sauces and oils and things like that. All of a sudden you have someone who's basically might be on public assistance or is in a minimum wage job, and they start to create jobs. Perhaps, some of their family members are working in the business. They start to turn a profit. They all of a sudden become a five or ten person company. Their kids have a better education. They're all of a sudden is more opportunity for their children, etc. That is really transformative on generations. And that's what's exciting about, I think, micro-lending and small business lending in low income communities.

[00:42:56] Spencer: as you look towards the future of this region and also towards the future of the country as a whole what do you see is the biggest areas where the sorts of lessons you've been describing could be applied to make things better?

[00:43:10] Bud: I think locally, we have to bring more creative thinking and actually doing to the big problems that we have around housing and transportation. You know, this applies to all the coastal communities in California. Clearly, the the homelessness crisis has been brought about by the high cost of housing in our state. And, uh, we think of it very much here about what's happening in Santa Cruz or Monterey or Salinas. But the same thing is occurring in San Diego, Los Angeles, Orange County, Ventura, Santa Barbara. You know, up and down the coast, we're seeing homelessness. We can't, we're creating more homeless faster than we're finding places for them to live because of the high cost of housing. And our transportation system, our infrastructure has just not been improved for a long time, and our population has grown. California used to be a state with 10 or 15 million people, and today were approaching 40 million people and yet we're dealing with approximately the same infrastructure that we had before. So of course we're going to have problems and we very much value maintaining our beautiful environment. And I think we can, but we have to make some hard decisions about density. I think we have to get a lot better at looking at other areas of the country in the world. And I'll give you a couple examples today. In the Times today, there's a story about Minneapolis and how they have just done away in certain parts of the City with a single family zoning, right? So it's okay to build duplexes and four-plexes where single family homes used to be. The only thing that one could build that kind of innovative thinking. There are several cities around the country where bus on shoulder, where you agree to use the shoulders to provide a better public transit solution, more reliable public transit solution that could get there and a reliable period of time. Uh, that's also occurring in Minneapolis, but other cities around the country. You know, we studied. We study it, we study it. We've got to start doing more stuff right? To me, I've spent a lot of the last four years on a project about here called Greenway, which is converting our unused rail corridor into a really a transit corridor for bikes and pedestrians, but preserving the natural beauty that exists in this corridor. In Monterey County, you've already done that. But in Santa Cruz County, there's this wishful thinking about, you know, we could spend a billion dollars on a train that runs between Watsonville and Santa Cruz? I'm pro transit and pro, trying to find ways of providing a mix of transportation alternatives for our community. However, I'm not for wasting public Resources in an impractical odyssey with money that we don't have that has, you know, huge environmental problems associated with it. And so, you know, our public sector leaders have to have the courage to look long-term at some of these solutions and act differently than we've acted before. The people are here, the problems exist. They're not going to go away by us wishing that they would go away. They're going to go away because we come up with innovative solutions. We look at solutions that have been trying to elsewhere, and we have the courage to make decisions to go against, you know, Orthodox-thinking that has prevented us from solving the problems in the past. So that's a little bit of my soapbox about that. But I think that, you know, we can look to cities like Copenhagen, for example, for bike infrastructure and innovative transit thinking. We can look to cities like Minneapolis around innovative housing thinking there are great things going on in little laboratories, the laboratory are our cities, and we need to take better advantage of the things that are happening. Utah, for example, has basically solved the homeless crisis. Now there are much more homogeneous population, but their housing first philosophy has really worked. It's actually lower cost in the long term. We can apply that same kind of thinking here. Let's figure out how to do it. We're spending an enormous amount of resources doing Band-aids on problems instead of going to fundamental solutions.

[00:48:23] Spencer: So again, I think one of those lessons from your tech background, Right? You want to try things, and if you're going to fail, fail quickly so you could move on to the thing that's going to work.

[00:48:34] Bud: Absolutely.

[00:48:36] Spencer: Well, Bud, I really appreciate you taking this time with me. It's been such an interesting discussion, and you're doing so many interesting things. I'm sure we could talk forever about it, and I hope we get a chance to talk again. Thanks so much again.

[00:48:49] Bud: Spencer, thank you very much for the time.

[00:48:54] Spencer: You've been listening to Dastardly Cleverness in the Service of Good. We just heard my interview with social entrepreneur Bud Colligan. If you liked it, please give it a rating on iTunes or wherever you get your podcasts-- it makes a big difference.

The podcast home is a DastardlyCleverness.com. On Twitter were @DastardlyClever, and on Facebook we're DastardlyCleverness.

The podcast is produced by Boots Road Group. I'm Spencer Critchley. Thanks for listening.