Ann Yang and Phil Wong were the darlings of their local startup world in Washington, DC. The precocious founders established their venture, Misfit Juicery, while they were still Georgetown University undergraduates. Their idea was simple: Take fruits and vegetables that would otherwise be thrown away, and turn them into cold-pressed juice. Based on this simple idea, they were able to garner significant support from the Georgetown entrepreneurship ecosystem, generate important relationships across Washington DC, and gain access to the Halcyon Incubator, a residential startup incubator that accepted Yang and Wong as part of its third cohort in late 2015.
But these entrepreneurs had more in mind than just making cold-pressed juice. They wanted to put their mission out front and fight food waste at scale. And this is where the story gets complicated.
Social enterprises face a number of challenges, and perhaps one of the most daunting to overcome is the stigma around the concept of a “double-bottom line,” as a company purses both profit and impact. Simply put, investors are skeptical. “I’ve certainly been in rooms where investors shut off the second your vision incorporates your mission,” Wong says. At the Halcyon Incubator, we’ve worked with dozens of founders who have faced the same pushback around their mission. Many social entrepreneurs exist and compete in markets that are not solely impact-focused. Misfit Juicery is a perfect example of this. The majority of companies competing in the cold-pressed juice category are not impact-driven.
If we want to support the development of early-stage social enterprises, the driving question becomes: What is the competitive advantage of a founder calling their business a social enterprise? There are certainly a few answers to this question, but potential corporate partnerships are one of the most powerful, if underreported, ones.
Large corporations are facing a new reality. With significantly more transparency across the world, consumers are holding businesses accountable for the impact of their core operations. Nearly two-thirds of Americans believe that companies should take the lead in driving social and environmental change. This presents a challenge for some, but for other companies like Baldor Specialty Foods, this new era of transparency and accountability presents opportunity. Baldor is a major player in the food industry, and like many of its peers, it is now looking at how to best address the issue of food waste during its production process.
Many of us never stop to think about how our produce arrives in the pre-cut section of the grocery store. Companies like Baldor, one of the leading distributors of produce in the Northeast, ensure that grocery stores across its geography have fresh and neatly cut produce in their stores. But the process of creating the perfectly square watermelon cubes and rectangular carrot sticks for consumers involves waste. How does a large corporation like Baldor authentically address the impact of its core business?
In 2016, the company established a partnership with Misfit Juicery as part of its SparCs program (that’s “scraps” spelled backward). Baldor sells its carrot tops and watermelon trimmings, among other produce, to Misfit, generating a new revenue stream, while addressing the issue of food waste by working with a social enterprise dedicated to that mission.
This partnership is at the crux of the argument as to why a social enterprise has a competitive advantage in the marketplace. Partnering with a social enterprise and aligning that work with your core business operations makes much more sense than trying to position an entire company as something it is not. Re-engineering an entire company is incredibly difficult. Investors, board members, management, and employees all get on board with a set of values and a culture that cannot be changed overnight because it plays better in the public. This fundamental reality means that a large company might not adapt so nimbly to an increasingly impact-minded customer. (Not to mention there is quite a bit of consternation in the social enterprise field about large companies diluting the sector when they try to re-brand themselves as social enterprises.)
The relationship between Baldor and Misfit Juicery is a fantastic case study in how mission alignment creates true value. Baldor has developed a full program to sell scrap produce, with Misfit serving as one of its anchor customers for the new product line. But it didn’t stop there. “Working with Baldor has really been about building a relationship,” Yang says. “We’ve iterated around what produce is easily used for our juicing process, and what produce is better used for other product lines. At the same time, Baldor has been critical in helping us establish customer relationships across its supply chain.” Shortly after establishing its partnership with Baldor, Misfit landed its first major account: Eataly, a store and restaurant chain based in New York City. The synergy here makes perfect sense. As Misfit and its brand succeeds, so too does Baldor’s mission to fight food waste.
In many ways, Misfit Juicery’s success has quite a lot to do with its strategic alignment with companies like Baldor. Yang reflects on this, saying, “As founders, we are motivated every day because of our mission, and being able to build sustainable business relationships with companies aligned with our mission allows us to keep that impact focus in our work.” This case study is one of many where social enterprises leverage their authentic impact to help solve a real pain point for large companies. Forward-thinking companies like Baldor can reap significant value by finding ways to partner with these innovators to solve the impact challenges they face in their core business operations.