A bull market for social entrepreneurs

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 percent, as employers across techdom eliminate jobs and scale back expansion plans.

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.

"The downturn is good for us," Nesbit said. 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 added. That means that if his startup delivers results, "people pay attention".

While Stanford is famous for minting billionaires, including the founders of Google and Yahoo!, 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, said that something new is afoot.

"People want to find something that feeds their soul," he said. "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 President Jeffrey Skoll, are ramping up activity. "When it comes to things that save the world, we're seeing an increase in funding," Goodson said.

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 said. 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.

A year ago, Nesbit took 100 reconditioned cell phones and a laptop computer to St. Gabriel's Hospital in rural Malawi. There, two doctors were attempting to care for a dispersed population of 250,000 people, many of them infected with HIV. But efforts to stay on top of patients' conditions were hampered by an expensive, inefficient, and not always reliable means of communication: messengers on motorbikes.

To help physicians get more frequent status updates at a lower cost, Nesbit and his co-workers distributed cell phones loaded with an open source software, Frontline SMS, which enables phones to broadcast 160-character text messages to a network.

After handing out the phones and training 75 community health volunteers in the area to use the tool, updates poured into the laptop at St. Gabriel's. Doctors there were able to respond to emergencies, get health updates, and follow the medicine regimes of patients suffering from AIDS and tuberculosis.

According to Nesbit, the cost for the first six months was US$250—and the system saved US$4,000 in motorbike fuel alone.

Notably absent from those calculations are salaries. Nesbit's company is run entirely by volunteers and students, six of them at Stanford.

Nesbit said that he and the others graduating have landed fellowships and small grants to support themselves over the coming year. But the burn rate is low.

"I could run this out of my parents' basement (in suburban Washington, D.C.) if I had to," he said.

Stopping the next swine flu
In recent months, Nesbit's team has raised money, winning US$45,000 in prizes from the NetSquared Mobile Challenge Conference, and another US$5,000 from the William J. Clinton Foundation. The company submitted funding applications to foundations and is hoping to land US$300,000--next year's projected operating budget—that it could use to set up cell-phone health networks in 20 countries.

"Until we get that kind of breakthrough, we'll keep doing what we can," Nesbit said. In the meantime, the company hopes to keep collecting used cell phones through an Internet campaign.

This summer, Nesbit is setting up another network in Malawi. Then he will travel to Cameroon, where he and his medical director, Lucky Gunasekara, are using their technology to roll out a pilot for the Global Viral Forecasting Initiative. This is a project financed by Google, the National Institutes of Health, and others to identify and respond to early-stage epidemics.

Nesbit's idea is to use mobile messaging to track bush-meat hunters and high-risk patients—and to catch the next HIV or swine flu before it spreads.

Much like the famed Stanford Internet alums, Nesbit and his colleagues are launching a startup with global ambitions. The only thing small about Frontline SMS:Medic is its operating budget. It seems to be in step with the times.