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 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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South Swell Ventures

Monterey Bay Economic Partnership

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Nextspace

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Transcript

(Edited, based on an automated transcription by Amazon Transcribe.)

[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 director] 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 it, please remember to give it a rating on iTunes or wherever you listen. It really makes a difference.

Now, here 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: You're someone who's really hard to sum up in a few words. How do you describe yourself when someone 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 thereafterwards — 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 it?

[00:06:40] Bud: I've always felt that business is a very dynamic force. Unfortunately, I think in the last 20 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 nonprofit sector or a profit-making business, they think of themselves 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 [of] 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, and 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 and 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 as really — it's a form of just honest accounting because externalities are the things that you're not tracking on your balance sheet and your income statements, but somebody else is. Somebodey else is incurring those costs. And, I guess, you know, Michael Porter, quite some time ago, came up with the Balanced 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 approaches all the way to regulation. For example, regulating our social media platforms — Europe has much stricter regulations around privacy, for example, and also hate speech. So 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 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 NextSpace and a digital technology nonprofit 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 10-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 [a] very low-paying 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, in genomics, 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 [of] people 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 are just over the coastal mountains from Silicon Valley, and —

[00:14:49] Bud: Exactly.

[00:14:50] Spencer: It's kind of a 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, through these mountains over the notorious Highway 17, 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, with some other academic institutions in marine research as well, and trying to use the modern technical advantages we have with the Internet and high bandwith and 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. They're just getting into their car and commuting over Highway 17, which connects Santa Cruz and San Jose, or they're going up Highway 101, 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 and tourism, which will continue to be two 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 are commuting out every day — give people a better quality of life because they'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: And CHOMP, for people outside the area, is Community Hospital of the Monterey Peninsula.

[00:17:06] Bud: Yes, 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 and taking the lessons that we've learned in the tech community and Santa Cruz and applying them to Salinas Valley, applying them to the agtech area, applying them to Monterey, applying them to 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, etc. — a lot of that stuff was to 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 agtech as 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 agtech 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 approach, and it's not just one thing that transforms a regional economy.

[00:18:52] Bud: Absolutely, and you mentioned the Monterey Bay Economic Partnership. That was the focus of the formation of the Monterey Bay 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 and 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 — talk about company towns, for example: they're reliant 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 and the Monterey Bay Aquarium Research Institute to the Marine Sciences Institute at UCSC, [Long] Marine Lab, Stanford has a facility down in Pacific Grove, etc. 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 research academic endeavor at UCSC in Pediatric Genomics. They were the first organization to publish the human genome on the Internet, make it public so that it 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 the 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 leveraged 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 and 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? A good example is the Monterey Bay Sanctuary Scenic Trail. It was his vision, and it's been sort of coming together for a long period of time. But when you rely wholly on public resources and public means to make something like that come together, it takes an enormous amount of time. So yes, I think it was heading in the right direction. The vision was there, but I think the dynamism of the private sector is important and even something that can 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 in the public sector, what's happening in the private sector and so that interchange, that exchange of knowledge, I think is extremely important. I don't think 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, DC and Atlanta and Minneapolis and Denver, many other cities, figure out: "Well, what can we do to leverage our resources and build these more knowledge-oriented industries that are the future 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. A good example I use sometimes is around technology transfer and 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 Brandt. But George Blumenthal, the Chancellor of UCSC, recognized this at the same time. He agreed to be one of the first board members of the Monterey Bay Economic Partnership. He got UCSC 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 a $3-million grant for entrepreneurship and funding startups and so forth. And so 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 resources getting integrated into nonprofit and public and private sector organizations with the same goal, so that leverage occurs, you see the Hackathon grow, and you see business plan competitions at places like CSUMB and so forth, a lot of things start moving in the same direction. You brought up agtech as well. There was a seminal effort led by Ray Corpuz, the City Manager [of Salinas], and you were involved, and John Hartnett and the Western Growers Association, the Forbes Ag Tech Summit, all of those things combined. 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 agtech sector and a growing agtech focus in Salinas and in Monterey County. And we've tried to again incorporate some of that learning into Watsonville, into Digital Nest, into the activities that we do there. 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, the ecosystem approach and I think you describe it really, really well: it's not just one thing — 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. 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 and 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 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 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 the Salinas Valley, they're really trying to make this inclusive of kids who come from farmworker families, in a lot of cases, 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, education for all. — so trying to figure out ways in which we can make sure that this region, which has, as you know, a very democratic ethos, is different from a kind of secular approach taken more, I think, in Silicon Valley. That's been one of the most satisfying things that I've been involved in, is the creation of Digital Nest, and again 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 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 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 Nest provides, that's really satisfying. And I think those efforts in agtech, the Coder Dojo program that Hartnell has taken over, teaching kids to code at all levels in Gonzales, in Greenfield, in Salinas — I tnink if we have any legacy after all of this is done, it will be providing opportunity to everyone; making sure that the opportunities that are there in education are available to the least as well as the most.

[00:30:46] [Advertisement]: 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 brain power between low-income and high-income kids. It's just really a question of the level of education and resources 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 terms of careers in Silicon Valley, but they're also going to organizations here: farm organizations and agricultural organizations that need marketing and IT services in their own companies, like Tanimura & Antle and Taylor Farms and so forth. So you know, a lot of these kids are very interested, that come from 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, or marine science organizations, or our 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've 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-Paracomp 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 continued 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 Loyola High School and 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 for-profit organizations, what I saw 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 the old adage of "Teach a 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 my wife and I are big 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 one of the biggest challenges at Digital Nest, one of the biggest challenges for the Monterey Bay Economic Partnership, is what's the model that [will mean] this organization will be long lived, and will have a successful trajectory in the future? If it's 100% on donations, that's not a good model, right? So in the case of Digital Nest, is it integrated with the education system? Is it talking to the big corporate and foundation philanthropic sources? Does it have an earned income element of its business model? Does it have 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: 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 can be taken anywhere. No one can 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 asked myself, "Why can't we apply this venture model more to businesses and low-income communities?" And the response I got was that in a tech venture you can get 100x on your investment, but in a restaurant or a cleaner's or alandscaping business, 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 you'll earn 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. If you make 100 investments and 80 of them don't do that well, or maybe you get capital back in some, etc., but five or ten do spectacularly well, it pays for a lot of misses, and so the idea is to keep trying things. Failure is OK as long as you fail fast and your good deals do well. I learned that was partially true. In impact investing, the venture model turned out to be less successful — not saying it can't be successful, but it's certainly less successful than mainstream venture investing. But the loan model has turned out to be 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 microloans, 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 young man, Eric Weaver, who left Stanford Business School and had this idea and started it up as a one- or two-person organization back in [the] 1994,'95 timeframe. So I think that the loan model is really powerful. It's really powerful in disadvantaged communities. More than 50, 60 percent of Opportunity Fund's 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 Africa lot, with very, very small micro-lending, focused mostly on women entrepreneurs. But bringing that capability over to the Monterey Bay Region has been really transforming for tens and hundreds, now, of 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 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 one to three percent or something. In lots of businesses, 10 or 15 percent is fine. It's considered to be a successful business, as long as you can do that reliably. And what you're describing 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 and 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 sort of mainstream, low-paying job — just take in Watsonville, the kitchen incubator they have there. They are 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 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 10-person company. Their kids have a better education. There all of a sudden is more opportunity for their children, etc. That is really transformative on generations. And that's what's exciting about 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 as 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 homelessness crisis has been brought about by the high cost of housing in our state. And we think 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: up and down the coast, we're seeing homelessness. 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 we're 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 and the world and I'll give you a couple examples. Today in the New York Times, 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, a more reliable public transit solution that could get there in a reliable period of time — that's also occurring in Minneapolis, but other cities around the country. You know, we study it, 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 out here called Greenway, which is converting our unused rail corridor into 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 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 huge environmental problems associated with it. And so 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 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 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 laboratories 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 they are a 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 Bandaids on problems instead of going to fundamental solutions.

[00:48:23] Spencer: So it's 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 at 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.