The world’s biggest problems cannot be solved by government policy or a foundation grant. Both of those tools can help relieve suffering or create better conditions for flourishing. But actual solutions to society’s crises of poverty, mental illness, hunger and lack of affordable housing can only be found in the private marketplace.
It’s the purpose of business to solve problems and the power of an entrepreneur to imagine a better future. To accelerate business as a force for good, Commonwealth has created a community of investors and entrepreneurs like Jaylon Smith.
Jaylon grew up in the impoverished neighborhoods of Fort Wayne, Indiana. As a little boy he had two dreams: he wanted to play in the NFL and he wanted to be a businessman. What he didn’t realize was that he needed to play football at Notre Dame and for the Dallas Cowboys in order to become a business professional. It was in those locker rooms that he gained access to knowledge, business mentors, capital and deal flow.
Now that he possessed access to business success, he discovered his purpose beyond athletics: to give his access away to those that come from where he did. This was not a charitable give-back gesture. Jaylon believed that minority entrepreneurs were the best solution to closing the wealth gap in America, so he founded the Minority Entrepreneurship Institute (MEI) at Commonwealth to close the education and economic gaps experienced by too many black and brown business owners.
The first play in Jaylon’s MEI playbook was to open markets in the place he grew up (Indiana), the place he achieved NFL success (Dallas) and the place he focused many of his investment priorities (Tampa). The first event winner in Indiana illustrated the power of MEI to accelerate an entrepreneur’s dreams while tackling the wealth gap crisis.
A dime to a dollar. That’s the gap between African American median net worth ($17,600) and white net worth ($171,000).
Those trapped in poverty live in places with little investment, poor financial services and almost no ownership. In other words, these are not poor neighborhoods as much as broken economies. That problem is vividly seen in the lack of home ownership among minorities. The 10x gap between white and black American net worth can largely be understood through white families rising from Depression-era poverty to the middle class through home ownership. But that door was not open to black families due to the 1934 National Housing Act, whereby the federal government introduced redlining to disqualify low-income, mostly black, homes from mortgage lending.
Enter the winner of MEI’s first pitch competition. Jada McLean possesses all the attributes of an NFL first round draft choice. She is a super talented African American young woman who graduated from Duke and honed her marketplace skills as an investment banker at Deloitte.
Putting her investment banking experience to use, Jada discovered that houses worth $50,000 to $80,000 were sitting on the market even during high homebuying seasons. She learned that these homes are too risky for traditional mortgages and that low-income families interested in those homes lack edthe financial wherewithal to purchase. This compounding problem devalued the houses through serial renters who were not building any equity.
Jada and her business partner, John Gibbons, created Hurry Home as a “rent-to-own but better” model. Hurry Home buys these properties at scale and then offers equity credits to renters who will eventually be able to buy the houses they are living in.
In Dallas, the MEI pitch competition resulted in investments in companies like Zirtue, ShearShare and Kanarys – which found co-investment by the likes of Steve Case and the Rise of the Rest venture fund. Jaylon’s journey as a successful entrepreneur and a champion for minority business owners has inspired many through national media. Harvard Business School produced a case study on MEI and Jaylon was featured on NFL Network and the TODAY Show.
Ruben Mauricio grew up in one of the roughest neighborhoods in San Antonio. After losing his father at age 5, he was trained by his stepfather to sell drugs at the age of 14 as a way to help his family make ends meet. He was kicked out of high school at age 17 and was incarcerated in his mid-20’s.
During a stint in solitary confinement, he wrote a letter to his mom explaining how things went from bad to worse. He then began his recovery by enrolling in the Prison Entrepreneurship Program (PEP) to learn about how to build a business and restore relationships with his family.
Upon release from the Texas prison system, Ruben became a diesel mechanic in the Permian Basin oil fields of West Texas. His entrepreneurial instincts fired up when he was servicing chemical treater and delivery trucks and noticed that the dealers and repair shops in Odessa and Midland were filled with repairs averaging $1,000 to tow the trucks, where they would be parked for 45 days.
Ruben founded RPM Diesel Service as a mobile solution to avoid these costly delays. His company repairs trucks on site in an average of three hours. RPM earned $1.9 million in revenue in its first year of operation with a 33% profit margin. Those results were reported by Ruben on the stage of the George W. Bush Presidential Center where he won the inaugural PEP Shark Tank administered by Commonwealth.
As the event ended, a board member of Stanford University’s Hispanic entrepreneurs program came up to Ruben and invited him to join their next cohort. That would have been an inspiring close to the story but the next chapter did not fit the Hollywood script. Ruben sought a bank loan for a second truck and was denied because of his felony conviction. In today’s banking world, a criminal record carries more weight than a robust P/L and a fancy pitch competition victory at a presidential library.
In response, PEP established Entre Capital as a Community Development Financial Institution (CDFI) aimed at second chance entrepreneurs—notably, you must have a past felony conviction in addition to sound economics to quality for an Entre loan.
President George W. Bush and Harvard business professors Arthur Brooks and Michael Porter are among the nation’s leaders who have identified the Prison Entrepreneurship Program as a leading second chance solution in America. Professor Porter’s Initiative for a Competitive Inner City (ICIC) reported that “(PEP) ex-felons who start their own businesses create an annual economic impact of $122.5 million across the state of Texas.” This success story is compounded when you consider there is an estimated $4 million annual savings to taxpayers given PEP’s dramatically reduced recidivism rates compared the national average. The ICIC chart at right depicts other key findings.
While lauding these results, the ICIC team also challenged PEP to bolster their services as an entrepreneurial support organization. PEP took the task seriously and hired Commonwealth and its think tank partner, Sagamore Institute, to help design a post-release strategy that would highlight the hundreds of graduates who have built businesses, raise capital to invest in those ready to grow and provide training for those needing capacity building.
One of Commonwealth’s partners, Kim Tan, stuns audiences when he explains that the world’s prosperous nations have spent the equivalent of more than four Marshall Plans in Africa since the original one that helped Europe recover from World War II. Yet, African poverty remains deep-rooted in third world conditions. Such is the difference between relief and development.
We began Commonwealth five years ago inside this enterprise solutions to poverty framing. The stories below depict how we’ve made investments in Africa and Israel to enhance health outcomes, create jobs and ensure shared prosperity.
The West Bank has long been one of the world’s most troubled hotspots. Israelis have been seen as occupiers. Palestinians have been seen as terrorists. Politicians have fanned the flames of mistrust and resentment. And too many have lost their lives in the conflict.
Yet, there is another story. Against the backdrop of disputed borders and failed peace deals, a growing number of Israelis and Palestinians have begun building businesses together. Their common ground? Both sides consider poverty to be the bigger threat to their families. In the West Bank and Gaza Strip, gross national income is mired at approximately $4,000 per capita. To create a better economy for their children, entrepreneurs from both sides are becoming business partners.
Commonwealth co-hosted the Israeli Palestinian Economic Forum in 2020 that featured remarks by US Ambassador to Israel David Friedman, who explained how the Abraham Accords will transform the Middle East. We also hosted a pitch competition featuring Israeli and Palestinian business partners. Our two investments proved that shared prosperity was indeed possible when solving a big problem in society through smart business and genuine commitment to social impact.
What do these business partnerships look like? Consider the story of Tally Zingher. She practiced corporate law (financing and M&A) in prestigious law firms in both New York and Dubai after earning a law degree at Harvard. Now she lives in Tel Aviv where she formed a partnership with Mas Watad.
Mas is the weight watchers guru for Arab women. Foreign Policy magazine featured her menu of grape leaves, cardamon-seasoned chicken kofta, and a calorie-sensitive cheesy knafeh for dessert. She figured out how Arab women can make meals honoring Arab culture yet dramatically reduce obesity and diabetes plaguing many Arab women today.
Mas’ genius for wellness paired with Tally’s genius for business growth combined in a company called Dawsat that may serve as the Weight Watchers of the Arab world. Said Mas to Foreign Policy, “Weight Watchers works fine for Europe but here you need something connected to our tastes and culture…Our program comes directly from the Arab kitchen.”
The Middle East and North Africa region has the highest rate of diabetes in the world. More than 125 million people are overweight making this issue one of the defining problems facing MENA governments, public health agencies and healthcare providers.
Dawsat is the first AI-based wellness platform in the Arab world. Thousands of people engage with Dawsat through online groups, healthy food subscriptions, a wellness app and social media. The company was recently invited to participate in the United Arab Emirates prestigious Hub 71 business accelerator.
Manny Ohomne grew up in a mud brick dwelling in Lagos, Nigeria. As a little boy, he sold water at Rowe Park as part of his mother’s small business. Like all of neighbors, he traveled the dirt roads without shoes until one day when American missionaries showed up at the park to host a contest. Whoever won the basketball shooting competition would win a pair of shoes. Somehow the ball left Manny’s hand and went in. Those miracle sneakers led to a basketball scholarship in America, a master’s degree and a successful career in logistics.
Twenty years ago, Manny returned to Nigeria to bury his father. There he observed a new generation of kids running the streets with bare feet like he used to do. While Manny’s life was transformed, he was shocked to be reminded that family and old neighbors were still mired in persistent poverty. From this pain came a new opportunity. Manny felt God’s call to transfer his business and logistics skills to a ministry audaciously seeking to put 10 million pair of shoes on those in need.
As Samaritans’ Feet distributed the shoes over the years, they discovered that bare feet in areas of prevalent poverty are dirty and many times the feet are disfigured and diseased. Manny and the Samaritan’s Feet team began to study the diseases they were encountering and formulating a meta-analysis of any correlation between bare feet and disease prevalence. According to the U.S. Center for Disease Control: “Neglected Tropical Diseases (NTDs) include several parasitic, viral, and bacterial diseases that cause substantial illness for more than one billion people globally. Affecting the world’s poorest people, NTDs impair physical and cognitive development, contribute to mother and child illness and death, make it difficult to farm or earn a living, and limit productivity in the workplace. As a result, NTDs trap the poor in a cycle of poverty and disease.”
Commonwealth collaborated with Manny to deploy $20 million to establish a World Shoe factory in Ghana to manufacture a product that fights disease while creating hundreds of jobs in the local economy. Next, the World Shoe will expand to Rwanda thanks to President Kagame’s government officials’ interest in adopting the World Shoe model as a part of its national public health and welfare strategy.
Commonwealth is a direct equity or debt investor in companies achieving impact in these domains: