Facebook, Twitter, LinkedIn, Google+, Pinterest, Instagram…the list goes on and on. Today we are hardwired to translate physical communities into digital communities. Social media are driving our online behavior, and more and more they are shaping how we make purchases online. The internet is awash with ideas, sites and companies that are rooted in the broad sense of community, many of which are making that comfortable sense of community transactional. These endeavors are mobilizing individuals to grow their businesses, taking advantage of tiny pockets of capacity (locally based, social media based, etc.), and utilizing feedback in strategic, systematically engrained ways.
It’s easy to see how we make decisions based on feedback every day. We trust our friend’s recommendation on a great restaurant and we visit Yelp when our friends are unavailable. We depend on feedback to drive our thought processes and validate our decisions. Now we’re seeing companies scaling up as a result of direct feedback from the members of their communities. Using certain metrics, feedback’s become a key of success, both in terms of rooting transactions and in making a profit. Here at GlobalGiving, we believe that feedback is crucial to our success in the nonprofit arena, both in terms of empowering individuals and in terms of powerfully scaling up.
Nathan Heller, in his latest New Yorker article about the Bay Area, comments that if “old activism focused on public infrastructure, the new model takes privatization as its premise.” He’s talking, of course, about the start-up/tech mentality swarming San Francisco in recent years. Silicon Valley is a dynamic, explosive area that continues to launch new tech company after new tech company, many of which are becoming staggeringly successful in just a few years. Part of the culture, particularly in the rising number of “social good” companies, seems to be shifting from traditional, heavy-handed and top-down organization to smaller scale private enterprises. In many cases, these social entrepreneurs are empowering their constituents, scaling down in the structure of their companies, and doing very well in the process. There are companies that are turning age-old, Nobel prize-winning economic theories on their heads. The problem? Nonprofits seem to be far behind.
For example: take Airbnb, one of those Bay Area companies steeped in entrepreneurial culture. Launched in August of 2008, it introduced itself as an alternative travel-booking online tool for rental properties, competing with major hotel chains and the stable VRBO.com. In just the last few years, its growth has been remarkable, catapulting it into truly popular conversation, best-of lists and circles of internet-cool. Even more remarkable, perhaps, is its size in comparison to major hotel chains like Marriott or Hilton. According to last year’s report, Airbnb now has over 300,000 listings in more than 33,000 cities in 192 countries. Airbnb is active in twice the number of countries as Marriott and Hilton, big chains with hotels in just over 75 countries. Now, of course, Airbnb exists mostly as a community and not as a major hospitality corporation, but the numbers make it clear: Airbnb is, arguably, as large in scale as traditional, established hotel chains. And Airbnb’s done it in just over four years.
What’s behind this rapid scaling up? Their secret to success must reach farther than snappy PR and technological accolades. Perhaps it can be partly explained by the community Airbnb strives to create. Despite a relatively minimal fulltime staff, Airbnb is a community of travelers and hosts where reputation is king. The website combines a feedback mechanism (customer ratings), a community where hosts can directly list their properties and a transactional method to connect customers with hosts (and make Airbnb money). As a result, Airbnb survives, and thrives, from feedback.
Of course, Airbnb isn’t reinventing the wheel here. In what may seem like way, way back in the dawn of the internet came eBay (founded in 1995), a true trailblazer. The company’s key insight was realizing that a feedback and reputation mechanism is essential to smooth transactions. eBay created the opportunity for both buyers and sellers to contribute feedback on their experiences. This amplified the simple transaction of the buyer delivering the desirable product, ensuring the buyer is paid, and committing to delivering the product to the buyer. By adding public ratings, eBay raised the stakes of the transaction. Buyers were incentivized to be honest, forthright and on-the-ball. Customers were empowered to rate their experiences. Both were rewarded in the eBay marketplace with high satisfaction ratings. This level of autonomy and accountability helped attract more buyers and more sellers. This simple-but-crucial step of adding relevant, unfiltered feedback took eBay’s marketplace to an entirely different level of success. And success it was: in 2011 the total value of goods sold on eBay was $68.6 billion.
Now, back to 2013. Why aren’t we seeing more nonprofits emerging with similar innovative ideas and similar scalable successes? It’s confusing, frustrating and disappointing. But it’s exactly what motivates GlobalGiving. We’ve done our best to have as few “rules” as possible (for example, our HR manual has been in draft mode for 10 years), so as to encourage open innovation and open networks. We’d like to scale-up our work by scaling down, in the same way companies like Airbnb have.
We can only do this if we are able to successfully tap into global communities, mobilize that base and begin collecting feedback on a transactional basis. In doing so, we will have accomplished two things. The first: we will be truly engaging with the communities receiving aid from our donors. The second: we will be utilizing that feedback to improve not only our services, but the services and products delivered by the thousands of community organizations we work with–thereby unlocking that sought-after thing in the social sector: scale. In a recent article about scale in the Stanford Social Innovation Review, Louis Boorstin encouraged the following if a nonprofit is after the quest for scalable innovation: “listen very carefully to the poor.” He’s very right: the important thing to remember is that in a business model such as GlobalGiving’s (an online marketplace aiming to expand our community, encourage accountability and measure direct social impact), you have to depend on feedback like nobody’s business. Without feedback, any company, especially a nonprofit, runs the risk of inefficiently managing your resources, providing services where there is no expressed need, or enabling incompetent service providers. And feedback is the only thing that makes a crowd-sourced business or nonprofit work. Without feedback, we would have to go back to command and control for quality control. Human beings are powerful catalysts for change, so by giving them a platform for their voice to be heard and by truly integrating their ideas into a business model, the crowd can help companies and nonprofits avoid pitfalls, writing a success story for everyone involved.
By Mari Kuraishi, president and co-founder of GlobalGiving, and Katie Zanecchia