Social entrepreneur

“Social entrepreneurs identify resources where people only see problems. They view the villagers as the solution, not the passive beneficiary. They begin with the assumption of competence and unleash resources in the communities they’re serving.”

David Bornstein, author of How to change the World: Social Entrepreneurs and the Power of New Ideas

According to the encyclopaedia Wikipedia, a social entrepreneur is someone who recognizes a social problem and uses entrepreneurial principles to organize, create, and manage a venture to make social change.

Muhammad Yunus, Victoria Hale, Jeff Skoll are considered as the new heroes. They are entrepreneurs with a social mission.

Today, there is nearly 50% of the world’s population living on less than $1 a day. In fact, in every corner of the planet, these people are struggling to make a living, for themselves, for their family.

These new heroes try to find new ideas in order to change societies for the better, in a non-profit perspective.

Muhammad Yunus is the founder and manager of the Grameen Bank, who was awarded a Nobel Peace Prize in 2006.

The Grameen Bank’s mission is “to empower the world’s poorest people to lift themselves out of poverty with dignity through access to financial services and to information”.

This bank do not work as the other banks, it gives small loans to people in need to launch a new business idea for example, without any guaranty and charges only 20% interest yearly, of which 10% is reinvested in operations.

For Yunus, “poor people are far more likely to pay back their loans than rich people, and poor women are the lowest risk of all”.

The bank’s revenues are donations and the global network of microfinance partners, from private capital.

Since its foundation in 1983, the Grameen Bank has lent more than $5.7 billion to over 6.1 million borrowers.

In my opinion, this new generation of entrepreneur is not a trend, but really an awareness of doing good to others who are in need. A good example is Jeff Skoll, first President of eBay, he created the Skoll Foundation, which uses business ideas to affect social change.

These new heroes have brought electricity, water, medicine, telephone to the poor in many rural areas. I think that such good actions bring a personal satisfaction.

Somehow, to start such a business with a social mission must be difficult. The entrepreneur must be able to attract investors, and even since he must be able to convince them to give funds.

The business is very risky, as there is no guarantee of returns, and though of continuity of the business itself.

Another drawback is that some companies with no scruples like the Banco Compartamos, a Mexican Bank, lends money to people in need in Mexico, and charges them interest rates that can exceed 100% yearly , and thus became the most profitable bank of the country. This bank only benefits investors and makes profit on the poor.

Sources:
http://en.wikipedia.org/wiki/Social_entrepreneurship
http://www.grameenfoundation.org/
http://www.bbc.co.uk/worldservice/trust/developmentcommunications/story/2006/06/060524_skoll_world_forum.shtml
http://www.businessweek.com/bschools/content/jun2005/bs20050616_5577_bs001.htm?chan=search
http://www.businessweek.com/magazine/content/07_72/s0712038774148.htm?chan=search
http://www.businessweek.com/magazine/content/05_52/b3965024.htm?chan=search

Vente-privee.com

Vente-privee.com Refashions Closeouts

Created in 2001, Vente-privee.com is a branch of Oredis, which is a wholesaler of closeouts.

Vente-privees.com is a private club on line which organizes exclusively for its members occasional sales of top brand products with discounts up to 70%.

To join this private club, existing members must sponsor new ones. Two days before a sale, each member receives an invitation by email to subscribe to the sale. These sales start at 7h a.m and last for two or three days. They buy on line by paying with credit card and then received the order by post. The member has seven days to return it, if he is not satisfied.

These sales are the results of partnership of luxury brands, like Gucci, Louis Vuitton, Swatch, Givenchy, etc. and vente-privee.com. These brands give their closeout inventory to vente-privee.com to be sold on line and the latter retains a commission per item sold.

The items for sale include luxury apparel and accessories, wine and champagne, household liners, small household appliances and baby clothes.

With a staff of 750 employees, Vente-privee.com is located in the Parisian suburb of La Plaine Saint Denis. The private club has today about 4.5 millions members.

According to an article of ComScore, vente-privee.com has been the second website visited by the French, with 1,225,000 and 1,937,000 visitors in August and September 2007 respectively.

Vente-privee.com is a very successful business model, which started as a leader in France, with 95% market shares and is already present on the German and Spanish market since September 2006. The company is planning to add the Italian, British, and in two years, the American markets.

Recently, Vente-privee.com has handed over 20% of its capital to the American Company Summit Partners. According to the CEO of vente-privées.com, Jacques-Antoine Granjon, the goal of this operation is to accelerate their industrial and commercial development on the American market.

The company is working with more than 600 famous brands, which prefer to deal with their innovative concept, which protects their brand image and brings in new customers.

The success of the business model is due to the fact that vente-privee.com does not buy any overstock, but only acts as a “middleman” between the luxury brands and the members.

In 2006, the company’s turnover and profit has reached 240 millions Euros and 50 millions Euros respectively and in 2007, the turnover was of 360 millions Euros.

The model is today copied all over world. In France, the company has about 70 competitors offering discount and closeout items on line and the main ones are 24h00, Bazarchic and AchatVIP. Its main British competitor is buyvip.com.

The CEO, Jacques-Antoine Granjon does not seem to be worried about these copycats as he knows well that the company has strong relationship with the brands. Moreover it is the first company to use such concepts, as flash sales, discounted high brand products and at the same time protecting their brand image.

It is a sustainable model as the company provides their consumers with high discounted products of their favourite brands, prices which are impossible to find in their shops and also because overstock is unavoidable.

Though the model has some disadvantages; there is a telephone number with a premium rate on the website and thus paying more to ask questions. It is difficult to return a product when unsatisfied, as the member has to send a mail, and then will receive a mail with a return number, which he adds on his returned order. Some people rather doubt using their credit card on line, they will prefer using cheques.

Sources:
http://www.vente-privee.com/vp3/aboutUs.aspx
http://www.journaldunet.com/recherche/?f_recherche=vente-privee.com&f_niveau_filiation=1
http://www.vnunet.fr/fr/news/2007/06/11/summit-partners-un-membre-vip
http://search.businessweek.com/Search?searchTerm=vente-privee.com&resultsPerPage=20

Freemium

The freemium business model was first articulated by venture capitalist Fred Wilson on March 23, 2006

The freemium business model works by offering a basic service for free, then offer premium versions and add-ons, available for a fee. The word freemium has been created by combining the two aspects of the business model: free + premium. The business model has gained popularity with Web 2.0 companies.

Examples:
Skype – basic in network voice is free, out of network calling is a premium service
Flickr – a handful of pictures a month is free, heavy users convert to Pro
Trillian – the basic service is free, but there is paid version that is full featured

Advantages:
Freemium offer free services to every user, and sometimes some of them are willing to pay more to have premium service. Moreover, nowadays payments through internet are secure and quick.

Disadvantages:
It may be hard to convert free users to paid users, willing to pay on-line.
Furthermore, this business model is a very competing one.

Sources:
http://avc.blogs.com/a_vc/2006/03/my_favorite_bus.html
http://en.wikipedia.org/wiki/Freemium

Easy group and yield management

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The concept: PROVIDING LOW COST TO THE CONSUMER

Easygroup was created in 1995, when the young Greek entrepreneur Stelios Haji-Ioannou launched Easyjet, a famous airline company known for its competitive airline ticket prices.

Today, Easygroup is present in many sectors, like Finance, Telecom, Cruise, car rental, internet café, DVD rentals, pizza…..

The company makes benefits by selling shares in the various businesses and by licensing or franchising the brand.

This is a successful business model, as it gives opportunities to people that cannot afford to pay higher price. For example; the EasyCruise.

And also, the company which has targeted the mass as its customers, is conscient that they would definitely continue to use its products and services.

Yield management, which is the process of understanding, anticipating and reacting to consumer behaviour in order to maximize revenue or profits, is used by Easygroup. The company is applying the principles of yield management in all the different sectors in which it has invested.


The Easy group offers higher discounts more frequently for off-peak times, while raising prices only marginally for peak times, resulting in higher revenue overall.

EasyCinema had opened in 2003, in Milton Keynes, a town in the South East of England, with 2000 seats.

The booking policy: Reserve early to pay less.

The tickets costs from 20p to 5£, depending also on time, at off peak-time, the rates was cheaper.

The customer reserved his booking on internet; either printed his ticket from home or printed it on the PC provided in the cinema lobby.

There was a choice of 10 movies, but not the Box Office.

At the beginning, there was no Pop corn, and then the option was proposed for £1. However, people were allowed to bring their own food

According to some interviews on the BBC news website, customers were satisfied with the concept and mainly with the low price.

EasyCinema used yield management to price the tickets based on demand and thus maximise yield, while reducing the average price.

Most cinemas run on a 20% occupancy rate, while the EasyCinema had around 50%.

The business stopped in 2006, after 3 years fight with the major film distributors who wanted to charge £1.30 per ticket.

EasyCinema is now on the DVD rental business. People book on internet and pay the rental around £2 (while rental in other shops costs rental £3.13). They received it by post and then just return it by post to get another one. There is no late fee.

EasyCinema proposes various movies, and even Bollywood films! The Website proposes a summary on every proposed movie and a rating.

EasyCinema should better send the download version of films via internet to have more members, and to save cost.

Sources:
http://www.easy.com/
http://en.wikipedia.org/wiki/Yield_management
http://www.easycinema.com/
http://news.bbc.co.uk/