A Bull Market in Social Entrepreneurs

Amid a woeful jobs market, Stanford grads are starting their own companies, many of them with hopes of changing the world

By Stephen Baker

• View Slide Show

For graduating students at Stanford University, it's all too clear that the economy's in the tank. The venture capital industry, with its epicenter just down the road, is stalled. The unemployment rate in Santa Clara County has doubled in the past year, to 10.9%, as employers across techdom eliminate jobs and scale back expansion plans.

Career fairs, students say, feature lots of recruiters handing out business cards, but few jobs. A host of seniors who in past years would have waltzed into six-figure jobs at tech companies, banks, and consulting firms must now explore other options. For those eager to cash in that Stanford diploma for a big payday, prospects are grim.

But if the goal is less making money than doing good, opportunity abounds. Ask Josh Nesbit. The lean 22-year-old graduating senior spent spring break in Uganda and Mozambique, where his startup, Frontline SMS:Medic, is putting in place communications systems aimed at promoting health in rural areas.

Feeding the Soul

"The downturn is good for us," Nesbit says. It frees up talented student brainpower. And it focuses donors and philanthropic agencies on startups that can get quick results on minuscule budgets. "Our credentials matter less than the product," he adds. That means that if his startup delivers results, "people pay attention."

While Stanford is famous for minting billionaires, including the founders of Google (GOOG) and Yahoo! (YHOO), it's heating up as a hotbed for social entrepreneurs. A record 112 teams submitted business plans for a social entrepreneurship competition, Social E-Challenge, during the spring semester. Their businesses, many already up and running, range from extending drip irrigation to poor farmers in India to manufacturing and distributing paper asthma masks for Mexicans.

Of course, philanthropic startups are hardly new to Stanford. Four years ago, Stanford students created Kiva.org, which links lenders in the rich world with microbusinesses in Latin America, Africa, and Asia. Yet Kiva's co-founder, Matt Flannery, who was a judge in this spring's Social E-Challenge, says that something new is afoot. "People want to find something that feeds their soul," he says. "That trend has hit a fever pitch."

Increase in Funding

And the same fever has spread to funding organizations. Case in point: Ashoka, a social entrepreneurship funding network, has extended into 70 U.S. universities, according to Bob Goodson, co-founder of YouNoodle, a San Francisco company that monitors startups. Newer groups, like the Skoll Foundation, founded by former eBay (EBAY) President Jeffrey Skoll, are ramping up activity. "When it comes to things that save the world, we're seeing an increase in funding," Goodson says.

And the dollars can go a long way. Thanks to practically free communications, this newest wave of entrepreneurs carry the means to run global enterprises in their backpacks. They can make calls on Skype, raise money on blogs and social networks, and recruit volunteer talent—from campus or anywhere in the world—via the Web. "I spent the last nine months of my life out of my undergrad dorm room talking to the Ministries of Health in 20 countries," Nesbit says. This summer he hopes to establish health networks in much of sub-Saharan Africa.

Nesbit's idea seems made for these spartan times. It operates on free open-source software, loads of volunteer labor, and discarded remnants of First World consumer culture—specifically, used cell phones.

Business Exchange

Track and share business topics across the Web.