Release Date 10/29/15 Episode Length 33:55
Brought to you byJotengine
Putting Venture Capital to Work on a Good Cause
with Brett Hagler of New Story
Rocketship: Alright, Brett so welcome.
Brett: Yeah, what’s up guys? Excited to be here.
Rocketship: Yeah, absolutely. I really enjoyed your episode on The Pitch, so I was excited to have you on Rocketship here. Digging a little bit further into what you’re up to now. So why don’t you start off by telling us a bit about New Story?
Brett: New Story is a crowdfunding non-profit that takes families that are living in life-threatening tent slums and we bring them into new, safe homes in a sustainable community that we’re building. You come into our crowdfunding site, and you can see the exact family that needs help. The mom, the kids, their ages, their dreams. It cost $6000 to fund the home for them. You give directly to that family. 100% of your donation goes to that family, and when the home is built, it takes about two months. We actually take a video of the family when they move into the home, and send it back to every single donor that gave.
Rocketship: Wow! Brett, you’ve got that elevator pitch down.
Brett: We’ve been telling a couple people about it. I appreciate that.
Rocketship: It’s even better than when you were on The Pitch, man.
Rocketship: Tell us a bit about who is the customer here that is coming and donating.
Brett: New Story started because I myself was a customer. My friends were basically the customers … And when I was looking at existing charities to give to before I had the idea for New Story I just kept feeling frustrated at the giving experience I was exposed to. I saw this problem down in Haiti which was families living in these tents because of the earthquake, and I originally just wanted to help. I wanted to give to charities. I would keep going on, and I would unfortunately felt the same the same thing. A lack of transparency. I didn’t know who I was helping. It felt like a black hole, and I thought “If I give $100, how of that $100 is actually going to the need?”. Being a loving start-up and loving entrepreneurship and innovation I just saw a lack of innovation, and transparency too, but lack of innovation and technology, and the space. All that to say, we wanted to build something that I wanted and that I knew my friends wanted and that has turned out to be our customers early on.
Rocketship: You were actually down in Haiti. That’s where this all originated. Could you take us to the story where the idea came from?
Brett: I was down in Haiti. It was actually my first time really being in a developing country. Long story short, a couple years at a school I really changed my life and decided I wanted to live a life full of selflessness and generosity as oppose to … I was really living the exact opposite of that throughout college and a little bit after school. All that to say, it lead me down to Haiti. I didn’t have the intention of starting a non-profit. I never thought I would be running a charity, but I saw this problem first-hand. Not only did I see it, but I got to talk to the people that were going through it. I particularly met a four-year-old little girl. She was living in this tent that had been given to her after the 2010 earthquake. You walk inside this thing, and you literally wouldn’t even want your dog to live in there. It is 200 degrees, disgusting dirt, no protection because it’s a tarp tent. Any intruder can come in, child abduction, sex trafficking. No protection against the weather. You can’t go to school. You get sick all the time from the horrible sanitation inside of the tent. I saw it, I smelt it. What really got to me was there were real personal stories behind it. That really put a conviction in me to want to do something about it. I really understood on that trip that I hit the lottery. I was born in America, and I didn’t do anything to deserve that. Just like this little 4-year-old girl did nothing to deserve where she was. It was just the cards that we were dealt. I basically felt a responsibility to leverage what I have been given, and try to use that and help other people to give them an opportunity because one of my favorite quotes and what really drives me is “talent is universal, but opportunity is not”. I’ve met just brilliant kids down in Haiti that have so much talented, smart, driven. They don’t have that opportunity. The equation becomes how do you balance that out? How do you give them more opportunity to connect with that talent? That’s what I get excited about, and all of that to say … sorry it feels a little long winded. That was really the genesis of New Story.
Rocketship: What’s standing out to me other than how much you were living in this and how much this means to you, is that it doesn’t sound like you were trying to start a start-up and then you were like “let’s come up with a cool idea”. You were hit with this problem, felt it, and said “I’ve got to do something”. I’m guessing it was your passion for wanting to do something that got you into this world of start-up, got you in touch with the right people, and brought you into the Y Combinator. I think it’s cool.
Brett: Thanks Ben. I never thought I would run a non-profit. I actually had a for-profit e-commerce start-up before this. I always loved entrepreneurship and start-ups, and always try to learn as much as I can. I was fortunate because I had a little bit of that background already, and had some resources. When I wanted to develop New Story I really wanted to build it the exact same way that I would build a for-profit technology start-up. I thought there should be no difference in how a nonprofit or for-profit should operate. You should still have the same growth goals. You should still try to build the best product that you possibly can. You should still hire insanely talented people. The only difference is that the revenue you’re generating … Which you’re trying to generated as much revenue as possible. You are giving that back to families, as opposed to reinvesting in a business or giving back to shareholders. That’s just an idea that I’m really passionate about, and I hope can inspire other social entrepreneurs to really approach a non-profit just like they would approach a for-profit technology start-up.
Rocketship: This is reminding me of something recent I’ve been coming across. The idea for maximizing for impact vs profit, but the way I heard it is actually for-profit companies trying change the way they think about their product. If maximize for impact it does some really cool things with how your team operates with the things you start focusing on. If you do a non-profit if you aren’t maximizing for impact, what are you maximizing for? I don’t know if that’s even a question, that just what came to mind.
Rocketship: Yeah that’s actually an interesting trend. I think Kickstarter did a big thing recently about it, but isn’t the goal to relieve themselves of their fiduciary duty to return all their money back to the shareholders?
Brett: I think it absolutely is. I started a for-profit commerce start-up that actually gave a lot of money back to charity, and turns out that’s not the best business model. I absolutely agree that is their responsibility. The way we look at it, we’re still trying to generate as much revenue … It’s sales, it’s donor revenue as possible, just like a for-profit would, but the only difference is that we’re giving that to the families because we’re obviously a charity, as opposed to a for-profit start-up which is giving it back to their shareholders.
Rocketship: You’re actually building the houses down in Haiti. You’re delivering a video back to all of the donors so they can see the results of their donations. What is it like for you to be in San Francisco and between Haiti running this non-profit?
Brett: I just got back Haiti last week, I’m sorry last night … I was down there all last week. I’m not going to lie, it’s pretty incredible when we’re over in San Francisco, we’ve got our heads down trying to grow our product. Trying to grow our user, acquire customers. We don’t get lost at all and the impact that we’re making, but when we get down there and we’re able to see the tangible progress of infrastructure and homes being built and seeing those homes, man you talk about satisfaction for your passion. It’s incredible and I just think when we go down there we always leave more inspired to go do more. We try to do our best to share that experience with our donors because New Story was founded on a really simple belief that donors should know exactly who they help, exactly where their money goes, and the exact impact that they made. That’s what we’ve set New Story to do, and when we’re down there we’re trying our best to bring donors as close to that experience as possible.
Rocketship: That’s awesome. This is a somewhat unrelated comment, but I noticed with your platform, I was surprised by this, as a user that it posted my name on the main campaign page and how much money I gave and then a comment. I elected not put a comment, not knowing it was actually going to be posted publicly or I would’ve said something. I recently read a post by Seth Godin talking about the reasons people give, and the psychology behind it, and one of those is the brick walkway with people’s names on it. People like to feel they did a good thing, but they also like to be recognized for it, and I think that’s a really cool element that you guys have in a digital way that I haven’t seen before. Is there a story behind that?
Brett: Yeah, we’re trying to go above and beyond to show the donor what they actually did. The donor is the hero here, we’re just the guide. We put a platform that connecting the donor and the people in need, and the donor is the hero. When they give, they should know exactly who they’re helping, and that they actually made a difference in somebody else’s life. When you donated Josh, it was to what we call a fundraising campaign that somebody else is running. We basically aggregate all the names of all people that donated … There is a box to check anonymous. We put those up there to let everybody know that, hey you are the people that made this happen. We just try our best to connect the donors with those people that need help. We try to get of the way and make it all about the donos.
Rocketship: One of the interesting things is that you guys are giving people the story. While they’re the hero, they’re building Haiti that’s why they come to you right now. What does it look like logistically to actually get those house built? What went into that, to putting those thing together?
Brett: We work with a local partner down in Haiti which we have seen is much more efficient and scalable than us trying build our own in-house capacity to do that. We embedded partners, and we found a local partner with a construction company that has an incredible resume. They have experience building homes and other infrastructure. We actually use them, and train them to build the homes and also to capture the content need for the experience creating to show our donors. It’s a lot of training and communication back and forth, because we are not on the ground. We will never be a charity with a lot of overhead with a lot of people on the ground and everywhere where they are. We’re going to stay very lean, and doing what we’re best at which is building a platform that people love and that we can scale. We’re going to partner with incredible people on the ground, and they can do what they’re best at. That’s how it works. A really cool thing is that all our homes are built by local workers. We’re employing locals in the community to build all of our homes.
Rocketship: I love that because it makes what guys are doing so scalable, which is the start-up mentality but I think that’s where you guys can grow and help so many different communities. Not just in Haiti, and never run into the same issues that Red Cross Red Shield runs into just because of all the organizational bloat, but that’s another story. I’m super curious, and I’ve wondered this ever since we’ve last talked Brett but what is it like to raise funds from “investors” .I know you call them your, it’s not a partner problem, it’s something else.
Brett: They’re builders.
Rocketship: They builders, that’s right. These are people…because your platform is 100% of the donation go to actually building homes. Now you actually need these other donors, builders, you need them come in and fill in the operational expenses gap of things, so you can grow things in scale. I have no context of what that’s actually like. You guys launch on Y Combinator and got some attention there. You came out of The Pitch, got a little bit of attention there. What is it like now? Do you manually reach out to people via email? How does it work?
Brett: It is pretty simple in the fact that the people giving on that side of the business … It’s a charity contribution so there’s no equity. There is no monetary return, however we like to position it as just like you would invest into a regular start-up. You are investing because you want to get an ROI out of that. If you give $25,000, you don’t want that to be a sunk cost. You want to get $200000 back in return. We position it as it’s the same thing really. It’s a social ROI. For example, if someone give us $50,000 just to cover operations, that’s not a sunk cost because our team goes out and leverages that $50,000 to bring in $300,000 in public donations. It’s actually a $1 input into operations equals a $6 output in public donations. People ask us all the time “Hey, where is all my money best spent?”. Just an example if someone gave $25,000 just to fund homes, for us that would be about four homes they could build, and that would be amazing but it would stop there. If they gave us $25,000 on the operations, our team would leverage that to go bring in so much more donations. That’s really what our story has been and I’ve specifically targeted angel investors and different venture capitalist at their respective firms, individuals not VCs as a firm and I’ve told them that story and they said “Wow, that makes sense. I’m investing it to the future of New Story. I’m investing their growth, their growth, their skill, their sustainability. To them that made a lot more sense than just giving to the projects.
Rocketship: That a solid value prop for sure.
Brett: We’ve position the last month, we’ve basically said we’re going to raise “angel round the funding” to cover our next 12 months run rate. We were asking $5000,000 and we are now about at 470. We’ve been fortunate, super grateful. We’ve had guys like Brad Feld, Pete Flint who is the founder of Trulia, he announces a board in Zillow, some Y Combinator guys. I won’t continue to drop names, but all that say is our mindset in running New Story, we want to make it very similar to a for-profit technology company.
Rocketship: I’m going to get way into the weeds with this one, but it’s just because I’m curious. You got Brad Feld on board before you even graduated from Y Combinator, am I right?
Rocketship: Was that a cold introduction to him? Did you just reach out of the blue and send him an email? If that’s true, what did that email say? I’m sure people are curious. You guys have a benefit in a non-profit making a big difference in the world and Brad is a great guy, but I’m just curious.
Brett: I would just say Brad look into this … I definitely don’t want people to email Brad. Basically to almost anybody we’ve reached out to, it has been pretty much cold. We’ve have had a couple intros. I just try to do things differently. For example, instead of sending a regular email that probably anybody else would send, instead we would make a short little Youtube video. We would say “Hey here’s the New Story team” maybe we’re even in Haiti, or maybe we’re doing something that’s creative or out-of-the-box directly to them, very personal. That’s worked for us. Doing things like that, they’re a little bit different, being very persistent. It’s worked. You’ve mentioned the YC part, absolutely I’m not going to lie, of course that’s a great stamp for us and I’ve never not played that up. Now as we build more credible people that are supporting us, I think momentum begets momentum. We were very lucky to have Brad come on early and that has influence some other people to come on as well. It has resulted in a snowball effect because we have a newer level of credibility. I think in the beginning try to just create a thing to manufacture the first couple of people or maybe it’s an organization or whatever it might be. Once you get a couple, I think that helps reel in the next couple then after that, we’re off to races when it comes to building people around you.
Rocketship: I’m curious when you’re raising, and raise someone like Brad Feld who has his own fund, or even Y Combinator, are you raising from the fund? Or are you raising from the partner, individual?
Rocketship: Okay, there’s no tax benefit for a VC fund to donate to you?
Brett: No, there’s not. We just go straight to individuals because we understand a fund is a fund because they’re trying to generate as much profit as possible that’s going to back to their LP’s and for them. We don’t position it for the fund investing, it’s the individuals. We wanted to target angel investors, people in tech, individual venture capitalist because it was our position we are looking for investors into New Story because we want you to help build New Story for us so that we can grow in skill and that’s why we’re coming to you, because you are a great investor. You know how build a start-up. We want you do that with our non-profit start-up.
Rocketship: Are you raising tech sectors? A lot of people you mentioned are tech focused, is there also a non-profit sector you can tap into?
Brett: I’d say about 80% we’ve raised so far is from the tech sector. We’re young, we’re ten months into this thing. A lot of the foundations are non-profit funding arms, they usually like you to be around at least for a year. A little bit longer. We move really quickly. We didn’t get our 501C3 which basically makes you a real tax deductible charity for about 5 months into starting this. We’ve moved really fast, and we’ve just been fortunate that the tech community has supported us. In the future, yes absolutely. we’ll be going after foundation, we’re setting up the type of … They all have the specifics on what they look for, what they like to see. We’re setting that up from day one so we can go to them in a year, and say “hey this is what we did” and then we’ll be able to get funding from them.
Rocketship: Very cool. It’s always good to have multiple sources as you move forward. Who knows what’s going to happen? That’s awesome, thank you so much for coming down and joining us. Where can people listening get involve in New Story?
Brett: Thanks guys. The best thing is to go to our website newstorycharity.org. There is a couple ways to get involved. One, anybody can give directly to a family. That’s an option, anything from $5 to $5000. The second option is you could run a fundraising campaign, The Pitch podcast did, which was awesome. They raised a couple thousand dollars. It was incredible. You can start a campaign for the holiday season and try to rally your friends and family to fund part of a home, that’s another option. If there are any angel investors, we probably need about two more investors to join us in our angel round. That would be awesome as well.
Rocketship: Where can they reach you?
Brett: I’m at [email protected] and I’m also pretty active on twitter @bretthagler.
Rocketship: Awesome, thank you so much, and a huge thanks to Josh for coming on here from The Pitch.
Rocketship: Oh thank you, it was fun.
Rocketship: Yeah, I’m so glad. If you haven’t listened to the Pitch go to thepitch.vc check it out. Definitely check out Brett’s episode on there, was probably a couple of weeks ago now.
Rocketship: I think it was episode 5, if I remember correctly.
Rocketship: Brad Feld was on, and someone from Google.
Brett: President of Kiva.
Rocketship: It’s a great episode, and go check it out now.