There is no inherent incompatibility between venture capital, charity, and family businesses.
Long-term planning, individual dedication, teamwork, and creative problem-solving are all hallmarks of the entrepreneur mindset.
When asked what sets apart a family-run business, the longevity of its leaders is often cited. They may also inform you that their family’s beliefs and practices have had a significant impact on their outlook and approach to company. Several sectors, from haute couture to automobile manufacturing, may trace their roots back to a single family, and those families frequently go on to become pillars of the community via their philanthropic efforts.
There has been a shift away from the “get rich first and give back later” mindset among the next generation of family company executives who are preparing to take their enterprises into the twenty-first century. They hope to make an impression and do something worthwhile at the same time.
More than merely passing the family business on to the next generation, these businesses care about leaving a legacy by giving back to the community and improving the lives of those in need. Many of their business contemporaries, especially those at pivotal junctures in their careers who are debating what direction to go next, share these ideals.
The tale of a well-known family benefactor teaches us a great deal about the value of playing the long game in pursuit of significant social influence.
Vision comes first
James Chen comes from a long line of benefactors who have always prioritized the education and literacy of the underprivileged. James was taught that he must be responsible for his actions if he were to enjoy special treatment. Thus it seems to reason that he was the one to successfully lobby for the establishment of the Chen Yet-Sen Family Foundation as a charitable organization. Chen claims that his generous father served as an inspiration. His father was unusual for his time in terms of his willingness to help others. Although most of his contemporaries just wrote checks to their hometowns in support of local institutions like schools and hospitals, Chen’s father would actually visit these locations and cajole authorities into doing the right thing. Understanding the requirements of a project and being “an educated donor” are two areas where Chen and the foundation’s approach to their work was profoundly shaped by this experience.
We make an effort to learn about the topic at hand and become experts in it. He told me, “Thus, as it was in the case of my father, endurance and persistence was very much the bedrock of our family’s humanitarian heritage today.”
James also personally funds Adlens, a firm that develops and manufactures spectacle lenses with adjustable power. These lenses can be mass-produced at low cost and distributed to the visually impaired in developing nations. After viewing early prototypes of the product produced by Oxford professor Joshua Silver, with whom Chen would later co-found Adlens, Chen was motivated to roll up his sleeves and become involved. Ninety percent of the world’s visually impaired individuals reside in poor nations; ninety-five percent of sub-Saharan Africans who require glasses do not possess a pair; and uncorrected refractive errors cost the global economy an estimated US$121 billion.
Silver’s lens technology instantly piqued Chen’s interest as an investor and philanthropist due to the potential benefits it may provide to nations with little or no access to the optical sector. Unfortunately, there were a number of obstacles (as shown in our three-part case study).
Financing with a Waiting Period
Chen expected to recoup his about US$10 million investment in two to three years. Sadly, the first version of the product was not only unsuccessful due to its high production costs but also because of the negative reception it received due to its large and heavy appearance. Chen readjusted his goals, now expecting to turn a profit after ten years despite the fact that the cost of redesigning the product will be several million dollars more than he had originally estimated. On the other hand, he said, this was all about “patient capital,” which was justified by the prospect of future societal gain.
A new Dutch product, the ‘Alvarez system,’ was licensed by Adlens, and the company went on to create it. An ingenious feature of this model was the use of two plastic lenses that could be slipped over one another. The overlap of the lenses, and hence the strength of the glasses, could be adjusted by rotating a little dial. Because of advances in manufacturing technology, not only were they simpler to mass-produce, but they also had a more typical, rectangular shape. Another huge plus is that you can adjust the glasses even after you’ve worn them for a while.
Vision for a Nation
In addition to Adlens, Chen founded Vision for a Nation to aid developing countries in their efforts to establish locally accessible eye care facilities and to supply inexpensive spectacles.
While Vision for a Nation is a nonprofit organization, Adlens is the for-profit side of Chen’s plan, with cutting-edge goods targeted at markets with higher incomes. With every pair of Adlens glasses bought, a pair of glasses (either adjustable or conventional) would be donated to a community in need at no cost.
It has been a difficult process for Chen to create Adlens and Vision for a Nation. He has put in a lot of time and money into these endeavors, and it is not yet clear whether or not they will be successful for the firm in the long run. But, Chen and his family can see past the logic of immediate gain.
Just do it
Chen recommends this course of action for investors with the means to be patient. Tom Tierney, the former Managing Director of Bain & Co. and current chairman and chief executive officer of Bridgespan, a nonprofit advisory firm, is quoted telling Chen, “in my whole career, the thing that strikes me is that it takes 10 years for a good idea, a good technology to get to a point where you can really make a good decision as to whether this is going to work or not.” James thinks it’s obvious he needs to keep going. The social mission in Rwanda will be supported by the 100,000 units of Adlens sold in the developed world last year, with sales having just begun in the United States and Mexico.
James Chen is a model of how pursuing business while simultaneously innovating and using that profit to do good in the world is possible. He has no plans to let up now that his success is picking up speed.