00:00:01 [Music] moving the needle on founder failure one conversation at a time i'm your host lucas poles and welcome to startup 2.0 by spark xyz join us each week as we give you access to some of the top investors and entrepreneurs around the country to help you think through and overcome some of the top challenges that start-ups i think there's no better place in the country to be investing than los angeles what is the problem that you're solving and for who like what is that specific pain point sometimes when a company is not

00:00:31 listening to its customers and just thinks it knows better than it customers has a really really hard time finding product market fit i want to see somebody that that isn't gonna stop you know this person you just feel like they're gonna they're gonna they're gonna make it work [Music] isabelle welcome to the show thank you i'm excited to be here uh great to have you on so uh i guess let's start off with uh let's talk about rev hub uh exciting new uh social impact uh incubator here uh in uh socal so why don't we start off

00:01:09 with a great high level overview of what you guys kind of do and then we'll uh we'll probably dive out uh dive into a little background about yourself sure so red club was um formed last year in uh during the pandemic actually founded by four individuals with a lot of different background and expertise in uh social ventures social entrepreneurship and really um the basis of you know their commitment was to build a legacy in orange county and southern california to really support um social entrepreneurship as a

00:01:43 catalyst to transform society um and you know the the market forces of business and entrepreneurship to really be able to um to bring sustainable solutions to um you know very difficult issues like housing food education and being able um to you know to do that in a again a more sustainable way that maybe what we do in non-profit or you know and also differently from really for-profit startups which um you know nothing wrong about that but we really truly believe in abundance right so achieving uh success and profit for a

00:02:25 company while you can still have that impact in the world that's what we really believe in and um you know we're pretty unique um in what we're doing here in southern california we also really support entrepreneurs throughout the whole journey um some of them just start with an idea or concept and we can support them actually the earlier they come to us sometimes the better because we can help guide them from the beginning you know and maybe save some time or you know mistakes even though it's always good to

00:02:53 make mistakes as entrepreneurs but um we can help guide them at that stage um we are also offering an incubation program where they can refine their business model and impact model and get really ready for investment so that when they are ready to scale and grow their business we also have that accelerator piece and band that will help fund these ventures which is sometimes a big challenge for for ventures um not just social ventures but across the board to defend it so we really rev have understood that in

00:03:31 order to be successful and for these ventures to really make it and you know and grow and have the impact they want to have in the world we needed to bring capital as well so we want to build this community of like-minded with individuals who really believe in the power of social entrepreneurship and by matching the capital with these enterprises to really start um you know again changing kind of the business ecosystem no uh honestly it's very exciting and i've definitely seen i mean even someone

00:04:04 like usc right they have a uh they have a whole new masters now associated with kind of that whole social entrepreneurship uh uh innovation piece and so uh it's a great kind of change to be able to see in the actual ecosystem uh but let's take a deeper dive into maybe some of the stuff that you actually do within the the incubator like what uh if a startup applies and is accepted what are some of the things they'll be actually working on uh during the actual incubator yeah so what i should mention

00:04:34 is we have a really key partnership with uc irvine and the bl applied innovation um here we um they have a wonderful incubator called wayfinder and typically this incubator is only accessible to uc um alumni staff students um but with a partnership with webhub any venture working with webhub will have access to the uci incubator and that's a big plus and this incubator has been running for years um i've been actually an advisor a volunteer there so i've had a lot of startups through this incubator and they have um

00:05:10 amazing resources um training content um a list of close to 300 advisors um who are experts in their field and some of them need workshops sometimes they have office hours so you can consult you know for free with an expert whether it's marketing accounting legal whatever you need as an entrepreneur so this is really a wonderful incubator that we have access to and now on the web website what we're doing we're also supplementing their incubator by adding all these social impact content so we are also affiliated with a global

00:05:49 network called impact hub and i think um for you know individuals who are in that field impact club is a very known name around the world they've launched a lot of incubators and accelerators and wonderful programs so we work with them we also get experts from their network um content workshops so it's kind of like you know double double value here in one place um and i think that's for an entrepreneur that's very attractive um we do not charge to uh for incubation so you know you can imagine that you know the uh

00:06:30 really the value given to an entrepreneur to what then our incubator um is in you know the range of thousands of dollars just by this expertise and content that they have access to yeah totally uh a very honestly worthwhile endeavor um uh so i i guess let's uh uh social impact is a very kind of broad uh term so what are maybe some of the examples of some of the portfolio companies that you've seen or that you've worked with that would really kind of fit into that kind of social impact mold yes i think that's one of the

00:07:05 challenge of there isn't a clear definition of what a social enterprise is and there are different type of models or enterprises that really maybe a social enterprise by the way they deal with their supply chain and protect the environment or you know recycle and then others are really about giving things away and you know reinvesting a lot of that profit for um you know to do good so it really varied um i think some of the you know examples um we have here for example as an example is one organization is promoting

00:07:42 peace in schools and eventually in cooperation right so the idea of hey we want us to um to instill these skills in children as young as possible so that we can have compassionate people around the world and thinking about peace you know as much as we think about math or english or whatever um and again the mission is really you know obviously to do good and and make this world a better place um and so we are working with them on understanding you know how they can really scale and um you know and expand us as much as possible around

00:08:19 the world um you know another um another one is more in the food industry and they are producing um little farms in different cities and the idea is to have this community rallying around you know maybe you know growing together and giving food away to people in need but at the same time they rent the farm which is a beautiful venue for events and weddings so this is again you know a way to make money as your main mission is to really help people um you know a basic framework that's being typically used in social

00:08:59 enterprise is the united nations uh 2030 sustainable development goals sdgs um easy to find on google and if anybody wants to look at them um there are 17 of them and under each one they are examples of what that may look because they are very lofty goals such as no hunger no poverty right which like oh my gosh i wish we were could get there you know in 10 years but it's gonna be a heavy gift and so but in order to understand how we may be able to get there they have to find step goals if you will so i think the

00:09:34 spirit is if the core of your company and your mission aligns with one or more of these goals you should be considered a social enterprise it really has to be embedded in your company though and in you know also we will help entrepreneurs develop that impact logic model that clearly help them measure that impact component so that they want to go to an impact investor or talk about their model they have something more tangible that they can present and also trackable and measurable no very uh very very interesting um

00:10:11 so i guess the we talked a little bit about for the social entrepreneurs kind of uh what their goals are and where they're going to end up going but what are the actual goals of red hub our goal is to really um you know to really use capital to like i said transform our ecosystem right and it's not just about not just creating jobs but changing the way people live and i think another big goal that is very important is promoting entrepreneurship as a valuable career path for everybody especially underserved community right

00:10:51 because we want everyone you know kind of with that equity lens to say i can become an entrepreneur um and you know of course as as you know there are a lot of um disparity in who gets funds and not and you know minorities are underrepresented and so that's also part of our mission to say we're gonna really look at our entrepreneurs with that diversity equity and inclusion lands to be able to really um make them succeed so i think we have a goal of you know educating the community uh promoting entrepreneurship so

00:11:31 you know we could track that eventually but maybe the number of new businesses created that could be you know a measure um you know we do have um kind of our own impact logic model as well just like the ventures do because we are ourselves a social enterprise yeah um and also you know the amount of capital available and invested is another big measure right so we really work with investors who are passionate about that sector and who will be able to target and track their investment and see you know really measure that not

00:12:05 just the profit but also the impact and we're hoping that again it's gonna grow because i think it's a really hot topic right now um and again a lot of new companies you know um i heard the speaker the other day say if you're creating a business today and you're not thinking about that social enterprise component you're going to have major competitive issues in the next five years because more and more i mean it's becoming a big trend you know we're starting to be more and more altruistic no it's it's true and honestly you're

00:12:37 serving the community in a great way because uh most of the uh programs that are out there uh are not focusing on this and most of the entrepreneurs that kind of run through it one of their big challenges is just finding the right information on where uh where to go and what to actually do so definitely kudos on that so i guess let's uh let's go from uh where we are now uh with uh rev hub but then let's go kind of more to the socal actual ecosystem so what do you see as maybe some of the positives uh and maybe some of the gaps

00:13:13 that are within the uh the actual ecosystem for here in southern california what i think is a positive is i really believe the younger generations um and not to you know put people in buckets based on their age or anything but i think there is this clear movement these days that the you know the upcoming generations don't just um expect purpose and good they really demand it and that's also part of the big transfer of wealth so you know in some instances um you know as we work also you know family foundations and family

00:13:49 offices we i'm optimistic in seeing a trend that the younger generation wants to invest with me um so i think that's going to be a great course to support what we're trying to do um i think some of the gaps um is that you know change is difficult for everybody and we all get back to our habits right and i think the you know the uh the makeup of the investor population just you know historically um you know it's kind of like another dive not extremely diverse right and it's kind of like when you build

00:14:28 a company and you hire people right they keep telling you you have to surround yourself with people who are not like you who look different who think different and i think that sometimes what's lacking a little bit in the investor community is that kind of diversity so you know this i'd like to see more investors who are disruptive and say hey you know i need profit yes i need to make money but you know maybe instead of having you know 30x or whatever type of return you know i really believe we can make it

00:14:59 a little smaller but we're gonna you know be able to to you know feed a hundred thousand more people with this startup or something like that you know just thinking differently and also um i do think it takes a lot of creativity right to say could that work or not and again when you've done something i mean there are tasks i've done you know um hundred times and i don't necessarily think or i'm not aware what i'm making when i'm doing them but i think we're trying to to make people pose and think and say

00:15:36 look how amazing this could be to match the business and the market forces with having a sustainable impact in your society i mean that you know to me because obviously i i mean this i am a strong believer so it's a no-brainer but i get it i get how people can be skeptical about it and say you know it may not work and and i like when people challenge me because it make always makes me think of okay maybe i didn't explain it correctly or how else can we visualize it for people so that it becomes a no-brainer as well

00:16:11 yeah no honestly that's uh it's like your entrepreneur running through uh uh your pitch constantly uh it's quite fun um so so let's uh let's switch gears a little bit let's uh let's talk a little bit more about due diligence um so like what does your process actually look like what are you looking for uh maybe in addition to some of the impact pieces or how do you even weigh uh those impact pieces maybe within your actual process um yeah let's dive through it a little bit right and i also want to make sure that i'm here

00:16:45 that you know there is probably a little bit different due diligence for incubation than acceleration um because you know on the acceleration side we do have quite a complex matrix around you know impact business model and also the diversity of the portfolio itself right so that's one thing but in incubation you know we look for um i think one of the key really criteria is the founder or the team itself yeah because you know i think you've been around a lot of entrepreneurs a lot of time you know great

00:17:19 entrepreneurs have failed so many times and they've you know they started company they created 30 others and finally one works and it's just the process of entrepreneurship so i think resiliency is the key skill in an entrepreneur and um really that drive which to me is gonna say hey if you encounter a lot of obstacles you're gonna fall back on your feet you're gonna be able to adjust you know they're an example with one of the entrepreneur i'm working on right now who was investing a lot of money in

00:17:51 marketing especially digital marketing because he thought he needed to be out there and get customers but that wasn't really working and our team kind of showed him well this is not even your your target audience is kind of a different segment and this is probably not the best way to reach them so he totally agreed and he dumped all these marketing spends you know recalibrated these activities and started doing something very different more of a almost b2b level um so i think you know i it's hard to assess on an application

00:18:21 that's why a lot of time during due diligence we do at least an interview or more because some of these subtleties you won't be able to get on you know on a form um so i think this is one of the main criteria is really knowing okay how would this be to work together are we a good match you know are you are you willing to invest the time innovation and do the work and um are you really motivated to to make it happen and when you maybe fail you know get back on your own and so on um on a more you know traditional criteria

00:18:58 i think already looking for um you know passionate founders passionate about that impact um and who have you know kind of at least a minimum idea and may have already launched at least an mvp not it's not a hard criteria so uh at least on their way to launching a product or solution or service and there's already kind of you know the form model around here it doesn't have to be completely refined because that's what we're going to do in incubation is really help them refine and validate some of the assumptions so it sounds a

00:19:36 little bit um you know not black and white which is what i like because um you know as you may appreciate too you know if you're thinking about a venture who's really changing the world of affordable housing it's to look very different in application from a company that's building an education full online right so that's also where i think we're doing the right thing by being really thoughtful around each application what the potential is talking to the founder of the team and uh spending that time

00:20:10 which i think will save a lot of time down the line in the incubator to make sure we have on board in the right ventures yeah no uh 100 um so uh we talked about some of the things that we do look for maybe what are some of the red flags uh that you run into while actually going through these uh these applications i think the biggest one is um you know getting the submissions in application that have really nothing of a social enterprise i mean i hate to say it but i understand you know ventures out there

00:20:48 may feel desperate they want to join an incubator they need to get investments so to me if when they reach out to rev hub or submit an application if there is no mention whatsoever of why they are social enterprise usually that's a huge red flag um i mean that's an easy one right um i so other than that to be honest we are you know very open because we we have work like i said with very early stage companies um some of them actually there was i think one or two may not have even been incorporated for example

00:21:26 and that's great because we can guide them on the best solution and then others are already out there getting some revenue so it really may vary and also you know right now we're really in southern california based even though we look at applications around the country um especially if they have an impact in southern california so obviously a lot of online businesses are everywhere accessible every year so that's not a huge deal but international i think right now we're not really considering applications of

00:22:00 company state outside the united states for a lot of also legal and regulation you know reasons where we don't have the expertise um but again as our name says it worked so i always want to make sure i can support anybody who comes to us and if i can connect them with another impact hub in the world or you know anybody in our network who may be interested in talking to them always like to do that because i really believe in you know connecting the dogs and and somehow we're all connected it's just a

00:22:30 matter of you know getting the right people together so um you know so that's a lot of things we're doing in the community right now is really partnering with a lot of people and organizations to um you know to kind of be even more efficient in in what we do because we don't want to do everything on our own right and it's like never leveraging these partnerships and expertise around awesome so uh i guess let's uh let's jump to uh uh some of the problems that entrepreneurs face early on so i i'm honestly i'm very

00:23:09 curious about this because uh i'm not sure and i don't have a ton of experience in the social impact space right so uh i'm not sure if the i'm sure there are a lot of similarities but if there are any differences that a normal entrepreneur would face versus uh someone who like some mistakes that a social entrepreneur might make uh early on if there are any differences and if not what are some of those challenges that you end up facing i think one challenge may be that they are almost it can be too much on

00:23:44 the really the mission side yeah um so for example you know working with a venture where they may compete in a space by saying well you know the competitive players there you know make 80 cents on the dollar um we are not interested in making money we want to give back and this is how we're gonna do it and instead we make 30 cents on the dollar you know it's great but there may be an in between where you're like well how about we go to 40 or 50 because getting in there might actually help you grow and scale

00:24:18 a lot faster or get an investment that you wouldn't get otherwise right so i know it sounds maybe a little bit strange for me to say that as you know like the promoter of social enterprise and impact but um you know just like a lot of um and maybe not entrepreneurs but individuals were saying hey i need to solve this problem i'm gonna create a non-profit my first answer is like do not talk to him talk to someone before because you know in southern california i think the number of non-profit organizations per capita is probably the

00:24:53 highest in the country and many people are trading nonprofits every day some of them i mean i'm doing amazing work i serve on boards i love to have what they are doing especially in crisis management and helping you know keep people off the street and not hungry and so of course it's great but you know a lot of times you know getting them to understand if you if your model is really based like a non-profit on you're going to go ask for money in grants and others and and probably year after year right and

00:25:30 you're going to be dependent on this fundraising it doesn't sound like a really sustainable solution and it takes a lot of time and effort and it's not secure because you could get a big grant one year not get it the following year so i think with individuals who are like that really wanting to be mission driven you know here the question is yeah how about thinking about building a venture instead so you can still do all the group you want to do but on the financial side you're building a model that is going to

00:26:03 be you know regenerative and sustainable and you can still do fundraising it's great if you get some additional money but you're not dependent on it it's just kind of the cherry on top of the cake that is always a nice thing to have um so i i kind of see you know when i got into this world of social enterprise i could see you know oversimplifying that there are really two sides of the coin one is a traditional entrepreneur so that personality of someone who wants to build a company and do good so great social enterprise

00:26:36 is already on their mind they just need some help in in creating that but then there is a huge potential in nonprofit in the nonprofit world where actually more and more nonprofits are really talking about the social enterprise component of their organization because i think they realize that they can build this this model that also sustainable so there's a lot of opportunities out there um for i think um you know to be more social impact driven and and really building these models yeah i i find it interesting and i i i really

00:27:13 like your point about the about the sustainability of the actual venture because i'm sure that you're right you run into it a lot where founders are like yeah i'm 100 mission driven and i'm going to try to give this away for free but it's like if you could actually build a business that is then uh sustainable with the revenues that you're getting you could actually reach more people and help more people and so if you're looking long-term i think it actually uh would be more impactful to be able to

00:27:42 do it the the way that you kind of described it um yeah uh that's uh it's very interesting um uh i guess let's let's dive into let's keep the theme of like the the mission uh uh mission driven piece right so within uh within the actual team and we know that team is so important when we're talking about uh early stage entrepreneurs do do founders ever get in uh uh i don't know tiffs around [Music] where the mission ends up going or uh does it ever change as it kind of runs through time like what i feel like that's a whole

00:28:23 nother layer of complexity that maybe someone who isn't kind of mission driven might end up running into yes so usually i think the point in time where the risk is at the highest is after investment because um i think in the early stages usually everybody is on the same page this is what we're going to do we're excited about it and you know maybe we started doing it and was getting great results great then if they start getting an investor you know or a friend or something or even you know a vc year

00:28:59 what is usually at risk is if they are being asked to maybe start compromising and dream and drive more profit or even you know the team itself may be thinking oh my god for doing so well you know the yes you know this is better than we thought and in some instances you know the impact side may be a little bit um more a jeopardy in the sense that it's probably in their hearts but you know they have to always keep thinking about how do i still you know maintain my impact commitment because as things grow and especially in

00:29:38 these scaling phases it's when things may become a little bit tricky and that's why i'm i really think though that if they have that impact model built from the beginning that can be adjusted but and measured typically you know that should hold you know through the whole journey but i think it's where things may happen you know because then obviously the the more money you have access to the more choices you have just like people in life right and the more choices you have especially if you're a team the more

00:30:10 difficult it's going to be to agree and so i think a big part of that too is if they are building the team as they are growing so a lot of our entrepreneurs are solopreneurs um we have i think a couple of teams but some of them are just on their own and we also really coach them on building a team and to me these issues are actually very dear to my heart because i was a leader i led teams for many many years in different organizations and i really believe in the power of human beings and in you know self growth as an individual

00:30:52 and you know all these sub skills that are necessary to be a successful leader so i'm also really excited to be able to work with our entrepreneurs on that more human aspect of building a company and you know what to watch for and how um yeah and how to be a good leader because you know you also want people to to follow you and you know believe in what you believe and that's not always a given um and at the same time you know when things don't work out you gotta make some tough decisions and you know the more you wait the more

00:31:27 painful it is usually to report the mandate right so um i think i can see this challenge for some of our entrepreneurs as again they are very small at this point and they will need to onboard people and create bigger teams yeah you would mention at the beginning it was uh it a little bit around when they receive investment and so are there different uh are there what should social impact entrepreneurs will be looking for in more of a uh in an investor uh do they go to typical vcs or are they going to

00:32:03 more kind of foundations that are looking to make those type of investments like what that realm kind of look like yes so they are you know technical things i don't really want to get into because i want not the biggest expert but um actually we are working at red club with family um foundation family offices and you know foundations because they are vehicles like pris mri that are really perfect for investing in social enterprise but you know from an individual standpoint um i mean the challenge

00:32:32 honestly is if you go to a regular vc the numbers are not going to be appealing enough for vc i mean if they are good for you as a social entrepreneur you did great and if vc wants to talk to you based on your numbers you are doing amazing you probably deserve a trophy but so most of the time you know even even a lot of angel investors it's gonna be a really hard play um i think if you find an investor you know who really lives with their heart because like i said i really believe in the human component of things and who want to be

00:33:11 doing things differently so right it's kind of like that open-mindedness of saying hey maybe that's a risk i'm willing to take and i think you know for me it's like curiosity and inquiry if you're interacting with someone who really wants to understand what you're trying to do and really start to get passionate about it and say you know maybe i want to help i think that's a really good sign i think you know i would tend to say don't waste your time if you go to a vc or an investor and honestly they pull the same

00:33:41 20 questions that they would with any other venture because i've seen that happen and i'm like why are you asking the same questions with this company than you did with the other one which was like a patented medical device i don't get it um it's totally different model yeah so so again i think you know this is about you know you know it's okay you know it's kind of like the dating game right like you may have out of 100 people 90 maybe horrible for you but there are still 10 out there and one of these 10 may be the

00:34:14 perfect match so you have to have hope oh gosh awesome uh so uh as we kind of wrap up uh uh uh any final thoughts uh any last pieces of advice that you uh they might give a social entrepreneur or an entrepreneur in general uh well you know believe in yourself i mean as i you know as i'm a little bit older and i'm not an entrepreneur myself i mean to some extent but not like a lot of the entrepreneurs i work with um and it's just um you know surround yourself with the right people um you know i remember someone telling

00:34:56 me years ago just have at least five people around you who you know are pulling you up and not dragging me down um and you can please everybody so you know just um you know tap into your intuition your gut feeling and when you know someone is there to help you and support you you know just nurture that relationship um because i believe it can take you very far and i really believe you know relationships are key to a lot of things so um i know you know a lot of entrepreneurs are can be very technology-oriented i've

00:35:34 you know i've seen some develop like the best technologies out there you know medical you know cure to disease and it's it's really inspiring and at the same time it's not enough you can be a genius in your field the soft skills and the relationships are gonna be different so um so that's my advice and i know when you know you're younger it's not always easy to get but really um you know start reading some inspiring authors out there and and think about your self-awareness and self-growth as a human being

00:36:08 awesome isabel thank you so much for coming on the show really appreciate it great advice i look forward to chatting again soon thank you