Entrepreneurship Upside Down: What If You Start With What You Have?

You’re not likely to hear an entrepreneur credit the government for his success—unless you happen to be talking with Brandon Ward, founder of Austin-based food startup Brewnola.

“I'm not sure we would have ever become aware of the environmental impact of spent grain if not for the [RE]verse Pitch Competition,” says Ward. A collaboration between City of Austin and community partners, the prize competition encourages participants to think of local businesses’ waste, such as spent grain from breweries, as valuable raw materials that can serve as the basis for new social enterprises. The pitch competition is called “[RE]verse” because instead of starting with entrepreneurs’ pitching their business ideas, organizations pitch their waste materials to the entrepreneurs in the first round; entrepreneurs then pitch to judges in the final round. The entrepreneur with the best business idea for repurposing one of Austin’s high-volume byproducts wins $10,000. Last year, that winning idea was Ward’s: to use spent grain, a byproduct of breweries, as the main ingredient in granola bars, or “Brewnola Bars.”  

[RE]verse Pitch judges congratulate winning team Brewnola. (Image courtesy of the City of Austin.)

Prize competitions are by no means a new occurrence and have received both praise and criticism. The Knight Foundation argues that competitions have many benefits, including the ability to engage diverse participants, stimulate innovation ideas, and create value for various stakeholders beyond just the winners. Others, like Mulago Foundation’s Kevin Starr, point out there are many downsides to competitions, including the vast amount of time wasted by participants who lose the competitions and the lack of emphasis on implementation. Public sector-led prize competitions, while not as common as private and philanthropic-led ones, have been gaining traction in recent years. Examples include a collaboration between the Environmental Protection Agency and the Health and Human Services Department called My Air, My Health, which challenged participants to design a system to measure both air pollution and related health effects, and the City of New York’s NYC BigApps competition, which awards participants up to $25,000 to develop technology products that address civic challenges.

While public-sector-led prize competitions tend to occur in large metropolitan areas and focus on technological innovation, Austin’s [RE]verse Pitch Competition, the first prize-backed challenge offered by the City of Austin, is a small competition focused on using local assets to solve local problems. The competition provides a unique structure for government to engage the private sector, highlights the civic value in using challenge prizes to solve local problems, and offers a model for other municipalities hoping to generate innovative solutions for their communities.

Addressing a Market Inefficiency

In 2014, the City of Austin and partners launched an online marketplace for reusable materials to help the city reach its zero waste goal. The aim was to create a closed-loop system where waste leaving one company became raw material for another company. The platform allowed companies to post materials they needed or the materials they could provide.

While the marketplace was successful, something was missing. Several items, despite having reuse potential, drew no local buyers. Beautiful pieces of pre-1920s reclaimed wood were going to waste. The question then became: How might local government resolve this market inefficiency? In response, the City of Austin and community partners dreamed up the [RE]verse Pitch Competition.

The competition began in November 2015. Five organizations, including Goodwill Industries and a local nonprofit Recycled Reads, pitched their surplus and byproduct materials as business inputs to eager entrepreneurs. Next, organizers matched entrepreneurs with mentors to develop their ideas about how to repurpose one or more of the materials. A panel of judges selected finalists—the best idea per material and two “wild card” ideas—two next-best ideas using any material. Ideas ranged from repurposing waterproof clog shoes into safer, slip-resistant high heels to using leftover vinyl to create new backpacks.

Five weeks after the initial event, the finalists pitched their reuse ideas to a panel of judges and the Austin community. Judges scored the ideas based on business viability, sustainability, economic impact, social impact, and pitch quality. The public also weighed in, voting online for their favorite idea. In the end, Brewnola came out on top and walked away from the competition with $5,000.

The prize is structured so that the winner receives half the money upfront. They qualify for the remaining amount if they secure a match of $5,000 through outside funding sources. This matching structure functions as a way to legitimize the entrepreneur’s business model, and gives the winner a total starting budget of $15,000.

While Brewnola is still very new and metrics for waste reduction aren’t yet available, the organization has already implemented part of it business plan; it’s selling its products at farmer’s markets and will expand to online sales soon.

What We Learned

Three overarching factors were critical to the [RE]verse Pitch Competition’s success: collaboration and networks, Austin’s entrepreneurial atmosphere, and the structured, prize-backed competition format.

1. Collaboration and networks: The partner organizations involved with the project spanned city government, universities, and both the nonprofit and private sectors. Collaborators provided myriad ideas and skills, ranging from expertise on mentoring entrepreneurs to experience using crowdsourcing platforms to engage the community. Additionally, involving partners from multiple sectors allowed us to reach a wide array of participants, from high school students to retired reuse enthusiasts. And we were able to use the organizing partners’ networks to identify and engage a talented, diverse group of individuals to take on various volunteer roles, from judges to technical advisors. Collaboration also played a critical role in securing funding for the prize. Four City of Austin departments came together to pool funds for the $10,000 prize, a larger sum than one department could have offered, and ensured a broader network with a vested interest in the outcome.
2. An entrepreneurial environment: In an interview after his election in 2014, Austin Mayor Steve Adler set a goal for the city to become the “social innovator for the world.” His vision built upon a foundation of social innovation deeply embedded in our city. Austin is home to multiple programs focused on developing social enterprise start-ups, such as UnLtd USA, Tarmac TX, Mission Capital, and ImpactHub Austin. Austin also boasts high schools and universities with social entrepreneurship curricula and a city Office of Innovation. The social entrepreneurship scene is rooted in the broader entrepreneurial culture in Austin, a city consistently ranked as one of the best places in the United States for small businesses, venture capital investment, and technology start-ups. As a result, the Austin community was familiar with the concept of pitch competitions and with the potential for start-ups to help solve social challenges.
3. A structured, prize-backed format: [RE]verse Pitch is one of the few US municipality-run challenge prize competitions to focus on entrepreneurs. Initially, we thought the $10,000 prize money was the main hook for participants. But follow-up interviews after the competition showed that the cash was not entrepreneurs’ sole impetus for competing. The money pushed participants to “put in the extra effort” or to “spend more time refining an idea,” incentivizing more profound participation. But the competition also offered participants a methodical process and structure, access to mentorship, and a finite period of time to flesh out a business plan. This set-up helped focus the attention and skills of innovators in the community to help the City advance its zero waste goal.

Although not every city may have a social enterprise community, or a zero waste goal, every city has the opportunity to create a competition that raises awareness of a community challenge and incentivizes individuals and businesses to create solutions. Additionally, every city has sectors that often work in isolation. Harnessing the strengths of these diverse sectors through a collaborative partnership can generate better ideas, broader community engagement, and increased access to resources. The [RE]verse Pitch Competition demonstrates how through a prize competition model, municipalities can successfully leverage local assets to solve local problems.

Read more stories by Clare Zutz, Lance McNeill & Natalie Betts.