Mario Ferro found his calling converting talent into social impact. His startup, Wedu, selects outstanding young women in Asian countries and provides them with generous education loans.
The Italian entrepreneur, who is based in New York and Thailand, developed an eye for talent after scouring the world for “Rising Stars.” He used that eye to build the team of his social enterprise.
Hiring for a social enterprise presents a unique challenge because there is no promise of big payouts to potential employees. However, Ferro believes that the tight budget constraint of sustainability helped him combine social and business principles to find the best workers.
“The profile of risk-return is not measured by the amount of money coming in,” Ferro says. “You are using the market as a tool to solve a problem, but the reason why the market has not tackled it is because there isn’t that much money in it yet.”
Ferro describes the employee structure of Wedu as a “sandwich,” with the meat representing highly skilled, paid workers in Thailand, supported by volunteers all over the world, and a few U.S.- based administrators.
Keeping the bulk of the work in Thailand is a win-win for Wedu because it better leverages Wedu’s finances and injects fair wages to its target communities. Utilizing local resources does double duty for WeDu because they can focus on looking for passionate, highly skilled people without having to pay “New York wages.”
“The cost structure is more favorable internationally,” Ferro says. “You don’t want a good idea to fail because instant noodles are more expensive where you live and you have to spend four dollars on coffee. A lot of people make that mistake.”
Keeping staff costs low means that Ferro can afford to take risks on workers who haven’t worked at big companies.
“We are working as hard as if we were starting Facebook for no money,” Ferro says. “It’s not about your degree. It’s about the weight of your heart when you put it on a scale. “
That’s most true for volunteers, who comprise an important chunk of Wedu’s workforce. That means that Ferro always risks having to pick up the slack if a volunteer can’t complete a task.
“Project management is key,” Ferro says. “You have to set very simple tasks and set expectation of times and deadlines. They may say ‘yes’ and just disappear, so redundancies are very helpful.”
Relying on volunteers allows Wedu to stay lean and develop its business gradually. Wedu waited patiently for the right kind of investors: global venture competitions, impact funds, and patient capitalists.
The Global Social Venture Competition at University of California Berkeley is an example of a competition that offers small amounts of capital, but even the losers of the competition gain exposure to potential investors.
Impact funds like Acumen and LGT Venture are also designed to be more open minded than a traditional foundation or a bank. Impact investors are just one example of patient capitalists, who look to get returns, but are willing to compromise on high-impact ideas that may only bring single digit returns, or bring it over fifteen years instead of four.
Once Wedu had enough money to begin hiring, full-time staff came from dedicated volunteers in the early stages. Ferro says that bringing them on came down to the exchange of social collateral.
“It’s very intuitive that social bonds change your risk aversion,” Ferro says. “Mark Zuckerberg could walk up to you on the street and ask you for a thousand dollars to start Facebook, but you would never consider it. That transaction is based on numbers, but also trust and respect.”
The marriage of social and financial contracts is something that Ferro has applied to many aspects of Wedu.
Wedu recently switched from awarding scholarships to a model called “future income sharing agreements,” where Rising Stars agree to give back a percentage their future income for a period of years. Even women who’d already received scholarships came back to Ferro, asking to donate some of their future income to keep the program sustainable.
Ferro attributes their decision to a feeling of “sisterhood” in the program. Rising Stars must participate in Wedu’s mentorship program for six to 12 months to build a sense of community before they can get a loan for their proposal.
Like the Rising Stars, Ferro has drawn heavily from his personal community while building Wedu.
“You really need to make sure that you love your startup,” Ferro says. He believes that the people in your circle need to love it, too. Ferro confesses that his cofounder is his wife and that having her there makes it “priceless.”