In Pursuit of Growth and Capital

By sharing a company’s story of growth with its community, and most importantly, by sharing with one’s community an intention for a specific kind of growth, pathways open up for the flow of all kinds of capital.

Let’s start by asking a question: do businesses need to grow? I’ll cast my vote to say “Yes.” Actually, I will say “Absolutely.” Yet, there are many kinds of growth. We can grow up, we can grow out, and we can also grow wise. So let’s make sure we are talking about the same thing.

The economy we know today is pretty attached to a classic growth paradigm that demands growth, and mostly growth that manifests itself in growing revenue or profit or, in its largest sense, GDP. At the micro level, I witness this paradigm in action every time I hear the question, “How are you going to grow this business?” It’s a call you can’t ignore: grow or die.

I’m not about to dispute the value of focusing on growth. It has created tons of progress in certain sectors of our society. But I think it’s worth noting that the kind of growth we have collectively experienced has not treated all parties equally. It might be worth exploring other kinds of growth as well.

People grow in many ways. Children focus on physical growth. The strength and capabilities that come with “growing up” are certainly useful. (Me, I topped out at out at about six feet tall and growing out is… we’ll just say, no longer productive.) Physical growth quickly becomes less important and we move on to emotional and intellectual growth. We grow our capacity for empathy. We grow closer to those around us. We grow wise.

Could business (and even our economy?) aspire to recognize similar limits to physical growth and shift aspirations to another kind of growth?

When we talk about the capital we put together at Community Sourced Capital, we often describe the process of connecting businesses directly to their community as “turning an enterprise’s social capital into financial capital.” The social part looks a lot like trust and strong relationships, and the financial part looks a lot like money. Businesses need financial capital for all sorts of things — including physical growth — and those things change as a business faces new challenges and evolves to fit a dynamic environment. Sometimes, we find businesses looking for growth in terms of product lines or financial maturity. Or, perhaps most exciting, growing in terms of connections to their community. That’s when the social capital part (trust and relationships) comes in.

By sharing a company’s story of growth with its community, and most importantly, by sharing with one’s community an intention for a specific kind of growth, pathways open up for the flow of all kinds of capital: intellectual capital, human capital, social capital. A company that realizes its potential to access all sources of capital will find endless growth.

So, what would you like to grow this year?

A&R Solar: One year in

It’s been nearly a year since we first sat down with Seattle solar company A&R Solar to talk about a big project they had in mind for their company.

It’s been nearly a year since we first sat down with Seattle solar company A&R Solar to talk about a big project they had in mind for their company. They were running out of room in a small office in Seattle’s SoDo neighborhood and had their eyes on a new location down the street. It would be a game-changer for the business by adding five times as much office space, plus a warehouse.

A&R Solar was the third company to use Squares to raise money for the business. They hit go on a campaign on an afternoon in February to raise $20,000, and a month later, they had $25,000 in Squares accumulated from dozens of people in their community, including family, friends, customers, and even a few “competitors” in the solar industry. Nearly 200 people came together to lend a little money and move a growing company forward.

“Using CSC to raise money put us in a very vulnerable position of asking for money. The outpouring of positive support from people we knew was incredibly energizing. It gave us a confidence makeover.”

“It gave us a confidence makeover.”
    –Co-founder Reeves Clippard

Two weeks after their campaign wrapped up, they had a check in their hands. They got to work immediately building out the new office. In May, they made their first payment on their loan, and then in June, they encouraged their Squareholders to take part in a new loan through CSC to fund a solar hot water installation for the Adrift Hotel on the Long Beach Peninsula.

Several thousand dollars in repayments from A&R Solar went back to work for a loan to the hotel, and A&R carried out the project. In September, A&R threw a party for their Squareholders to check out the new Seattle office. In October, another party to show off the solar hot water project with the Adrift Hotel, and by the time November came around, A&R’s loan was paid off in full.

Besides the Adrift, several Squareholders have kept their money in the CSC system by using repayments to make loans to other companies running campaigns with CSC. Here’s one example from a Squareholder:

One year later, A&R has been named one of the 100 fastest growing private companies in the Puget Sound by the Puget Sound Business Journal. And it’s no wonder, they’re in one of the hottest industries in town — and it’s an industry that happens to be doing a lot of good for the world. You decide if that’s a coincidence.

Your small business marketing strategy is staring you in the face

As head of Business Development, a question I’m particularly sensitive to is “How is your sales pipeline?” or “What is your marketing strategy?”

Community Sourced Capital is a small, hard-working operation, just like the businesses we work with each day.

As head of Business Development, a question I’m particularly sensitive to is “How is your sales pipeline?” or “What is your marketing strategy?” Continue reading “Your small business marketing strategy is staring you in the face”

Breaking the binary paradigm

Our team has been learning from mentor and friend Carol Sanford over the past six months. If there’s one thing we can count on, it’s that she’ll say something to flip our world upside down, and then follow it up with concepts, nuanced language and intention that reveals the full potential of where we can go from that moment of feeling flipped upside down. Continue reading “Breaking the binary paradigm”

Small business helping small business: part one

Conventional wisdom might say that if you have a web/technology-based business-to-business service company, then the pathway to rapid growth and revenues is to target large Fortune 500 companies as clients. Seattle enjoys the presence of many of those Fortune 500s: Microsoft, Boeing, Starbucks, Amazon, Zillow, and Expedia, just to name a few. Yet, Community Sourced Capital looks to businesses like A&R Solar, Starvation Alley Farms and Playback Sports as the future of our local living economy. These are the companies that make our neighborhoods more interesting to live and play in.

We get to work with these owners directly. There’s no corporate board vetting decisions and their possible impacts on quarterly earnings. Decisions are made by small business owners and CSC because they are the right thing to do and because they “pencil out.”

Both A&R and CSC experience success because of something we call social capital. Both of us are working against the grain, but we have lots of people supporting us. A&R installs solar (successfully) in the cloudy Pacific Northwest, and Community Sourced Capital runs a financial services company on the basis of sharing money. It’s a tough job, but somebody has got to do it. Somebody has to run these small businesses to bolster a new economy, and it probably won’t be big Fortune 500 businesses.

As I heard last month from a client, “it’s time for small businesses to start helping each other, no one else is.” It reflects the frustrations of small businesses owners drowning in marketing messaging from big banks and government about how important small businesses are to the health of the economy, but without action to back it up. I’d like to argue that, while we are nowhere close to being too big to fail, neither are we too small to succeed. We have to work together.

As CSC moves forward, we’re staying as true as possible to our small businesses customers, because we’re a small business too. We need each other to succeed.

This is the first in our series Small business helping small business.

Harvesting Social Capital: a renewable resource

This week, we’re launching our third and most ambitious campaign to-date with A&R Solar, a Seattle-based renewable energy company. Having A&R approach us to help them raise money for their new office space is an honor. One of the highest compliments I’ve received in my young business career was from Dave Kozin (A&R Solar’s CFO), stating “we could probably find other ways of financing this project, but we want to do it with you guys. We think it will be more fun getting CSC and our community involved.”< It's this kind of intuitive and values-based decision making in business that I identify with, and it's where I see CSC having continued success in the future. Actually, there are a lot of parallels between the two companies. Both are small, owner-operated, bootstrapped service businesses. A&R is a registered B-Corp. CSC is a Social Purpose Corporation. Both are built with sustainability at the core of the business model. We’re creating new jobs in a radically different economy than we might have planned for a decade ago.

In prepping for A&R’s $20,000 Squareholder Campaign, we spent the afternoon shooting a campaign video in their new headquarters (it’s a bit empty in the picture above) with a few members of the team. It was way too much fun to be considered work.

And having fun matters. Every day, the way we carry ourselves in the world impacts relationships and connections to those around us–either growing them stronger, letting them fall apart, or missing opportunities to build new ones by blowing by at life’s busy pace and forgetting to look up and meet your neighbor. Social capital fosters reciprocity and the willingness to share resources–knowledge, connections, equipment or even money!

So, how do we put social capital to work? After all, social capital is a renewable resource if we are conscious in how we use it. Consider the companies CSC has had the honor of working with so far. Each harvests a renewable resource, generating new value without being extractive. Recycling sporting goods at Playback Sports, organic farming of a perennial berry with Starvation Alley Farms and now solar energy with A&R Solar.

CSC’s business model is intentionally designed in a similar way. We harvest social capital in the form of shared money. In returning the money to Squareholders, we don’t deplete their ability to share it again. We believe this is part of a larger movement as we transform how we collectively think about money. We’re grateful for the small business owners, the squareholders and all the people in our world who are making their decisions based on their deepest values. This is what will bring in a new economy!