The Social Enterprise Business Model that Creates Scalable, Sustainable Impact; with Scott Boyer
How can you guarantee your social enterprise continues to make an impact for years to come? The answer is in the business model. Many social enterprises are making a difference in their communities and the world, but are they sustainable and lasting? There is a strategic way to make sure the mission continues, even after the founder has left the business.
Scott Boyer explains how this business model works, and how you can implement it, in the interview below.
Tell me more about the work you do, and your organization.
We have two organizations. ROW Foundation is our 501(c)(3), not-for-profit. And its focus is to help people with neuroscience disorders around the world, globally, through education, diagnosis, and treatment. And we have a for-profit company called OWP Pharmaceuticals.
My background has been in pharmaceuticals for almost 30 years. I was with Abbott and Bristol-Myers Squibb, then I left Bristol to start OWP with the idea of these for-profit companies funding the not-for-profit foundation. A lot of people don’t know this, but Hershey has a big not-for-profit that owns part of the company. Hormel has a big not-for-profit that owns part of the company. And the same thing for us. Our goal is for our not-for-profit to own 40% of the company. So as we grow, and become more and more profitable, ROW will scale right along with us automatically, not for us necessarily giving them donations, but from them getting dividends and profits just like a normal stockholder would.
Our whole focus is in neuroscience, so we have medications for epilepsy, depression, and bipolar. Our sales force calls on psychiatrists and neurologists, primarily, and that’s where we spend our time and energy. And that’s where our future pipeline is based too, in the niche of “neuroscience” disorders, which are basically cared for by neurologists and psychiatrists. In the foundation we focus on a lot of projects in epilepsy specifically, and some projects in the psychiatry space in depression, bipolar disorder, etc.
How did you get the idea to start both of these organizations together?
About 14 years ago. My wife is a nurse at a hospital here in Naperville, and we both grew up in Iowa. We’re kind of like these two frugal people and we’re fortunate, we have two children, they were both in high school at that time. I started to think about, “What have I brought to this world besides making some money through the pharmaceutical industry?”
I started to think, I’ve done pretty well and maybe there’s a way that I could use my skill set to give back. I started talking to my wife, and she immediately said, “I think this is a great idea, but you’re not going to do any of this until our kids get out of college, because right now I need you to make big checks and pay for the college tuition.” So I just kept doing what I was doing for another 10 years. I think my wife was hoping that I would just kind of forget about it and go buy a Corvette instead or something like that. I didn’t forget about it.
Then there was an opportunity at Bristol, who I was with at that time, where I could leave, and the neuroscience division was downsizing at the time. I could have stayed and gone to another area of Bristol, but I thought this is the perfect opportunity to get a severance package. You get a little kicker that way, and I had a retirement plan and I thought, I’m just going to take it and I’m going to leave.
I took that opportunity and left. My daughter had already graduated from Purdue and she wasn’t living in my basement. I had a son that was down at Belmont in Nashville, he was a senior, and I thought, you know what, I pretty much did what we agreed to, my wife and I. So I decided to leave. It took a lot of work. I actually was unpaid for about three years, but I stuck with it and now we’ve got a couple of products on the market. We’re not a big company, but we are profitable. We have a big pipeline that’s coming to fruition, and in another couple of years, we potentially could be $100 million company.
Was the business model as it is now the original idea, or is that something that evolved over time? How did that come about?
I met a guy and I explained to him what I was trying to accomplish. He was from Wheaton, Illinois, and he actually knew somebody that used a similar model. There’s a publishing company called Tyndale House Publishing out of Wheaton, and they have this model. They are a Christian publisher, they have one really popular book and then a whole bunch of other little books. The author of The Living Bible, from Moody Bible, wrote this book and became really popular.
He started a publishing company first and then later on started a foundation. But my CFO knew them and understood the model and said, this is what you need to use, a model like this. Now I have found a few other companies that use that model too including Hormel, Hershey, Lundbeck, Novo Nordisk, there’s a few other ones too.
We actually incorporated both the not-for-profit and the for-profit at the same time in 2014, with the intent of having them twinned or joined, so to speak.
Throughout your career and your journey so far, what’s been your biggest lesson that you’ve learned?
There are a couple of them. One of them is, you have to run a successful business first. You have to be willing to pivot and be a true entrepreneur, because our first product did not do very well. We dialed it back and raced toward our second product, which did a lot better. But you definitely have to be entrepreneurial in nature and be prepared to realize this is not working out the way I expected, so we’re going to have to shut this down and go in a different direction. You need to be able to pivot and go a different direction, if that’s what the marketplace is telling you. It was just not just telling us, it was screaming at us.
Secondarily, you have to have grit. You have to persevere when the times are tough, because there will be tough times. If you don’t have perseverance and grit, this is not for the faint of heart, that’s for sure.
What advice would you give to other social entrepreneurs?
There’s a lot of coffee shops and different things like that that are a business, and they have a social focus. I think those are all worthy, they’re all great. But they are tough, they’re tough, because they usually are not big volume; lower margin. A lot of them are labor-intensive as well. Those guys and gals, they definitely deserve credit for what they’re attempting to do.
As far as people that are trying to build a business where they give away 10%, or that they donate some cash, my advice would be to give whatever you’re trying to support some equity, some real equity in your business. This is not a fleeting thing that, for example, we had a bad quarter, so I don’t have any money to give away. Or let’s say the founder passes away and then the new person comes along and says, “Sorry, I’m not interested in helping you anymore.” Or you sell the company. This way, there’s a way for them to continue to scale and have sustainability. That’s our goal with this company, we don’t intend to sell it and we want this to keep going and going, even after the two founders are dead and gone.
We’ve structured it in such a way so that can happen. There are, like Hershey, the founders are gone, Hormel, the founders are gone, Lundbeck, the founders are gone. But the foundation continues to do good work. If you don’t give them a piece of pie so to speak, in equity, it’s only a matter of time before whatever your mission, your calling, your cause is, becomes part of history.
What’s your vision for the future, either for your business or for the world, or both?
We have two areas of focus. One is kind of common sense, we’ve got to build a strong pharmaceutical company that’ll drive profits, that’ll flow into our not-for-profit and to our shareholders and investors and all that, which is common. Secondarily, I want our model to become an example for other people to look to. It’s not common, and it needs to become more mainstream.
This gets back to the “why” are you doing what you are doing. Is it just to make money, if so that is fine and common. That is why the majority of businesses are in business. We are using the business as a tool to make money for the foundation that will help alleviate some of the medical and pharmaceutical injustice that exists around the world. So, what is really your intent? We are authentic with our intent to positively impact neuroscience patients around the world that don’t have access to the medications that we take for granted here in the US.
We would like to have people duplicate our model so that we can impact more people around the world. It doesn’t matter to me what that person’s cause or calling is, but hopefully they’ll be able to duplicate, or consider duplicating our model, with their business.
What action do you want readers to take?
Secondarily, to be curious about OWP and ROW. If somebody wants free advice from our CFO, I call him the model master, (or has questions about why we did what we did, what kind of corporation we are, different types of stock in order to set this up so that you don’t break any IRS rules, etc.) we would be more than happy to give free advice, if somebody was interested and considering this model for their current or future business.
Find Scott Online
ROW Foundation: https://rowpharma.org
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