NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, July 17, 2013

By Anne Field

Like any regular old startup, social enterprises make plenty of mistakes. You may recall Zack Rosenberg and his DoGoodBuyUs.com, which I wrote about recently and which got its first break thanks to a mistake.

Now, Rosenberg and his co-founder Elise King are about to celebrate the company’s second anniversary by trying to fix a bigger mistake–a fundamental problem with their business model.

You may recall that, previously, Rosenberg thought he could kickstart the site, which provides a commerce platform for products made or distributed by charities,with a Father’s Day promotion selling golf balls; the proceeds would go to a children’s foundation. Although the effort was a bomb, it caught the attention of New Forest Earth, which aims to fight deforestation in Mexico, Ecuador and other places, and sells crafts made by tribes in those areas. It became the site’s first partner. Rosenberg calls the effort “the best mistake we ever made.”

The site now features goods from 300 partners and has raised over $150,000 for various causes, according to Rosenberg. But it turns out, while business was hopping during the holidays, demand dropped after that. Rosenberg realized that neither he, who was in advertising sales before, nor his partner, who was in nonprofit management, had any experience in retail. Zilch. And they needed a way to survive the rest of the year.

So, they hired a vice president of retail early this year. That’s when they realized they’d been making a much bigger mistake than running a silly Father’s Day promotion. They were never going to attract the level of consumer interest and sales they wanted by keeping the status quo, that is, displaying products on their web site with some information about the charity and the cause and hoping customers would buy them. (Example: a pair of flip flops made from natural ingredients, with the proceeds going to help support farmers in the Tien Phuoc District of Vietnam).