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419: The GK Fund with Michael Benezra · Giant Robots Smashing Into Other Giant Robots

• CHAD: This is the Giant Robots Smashing Into Other Giant Robots Podcast, where we explore the design, development, and business of great products. I'm your host, Chad Pytel, and with me today is Michael Benezra, Executive Director and Co-founder of the GK Fund, a non-profit social impact fund to support BIPOC-owned companies in Greater Boston. Michael is also the COO of Colette Phillips Communications, helping to lead the All Inclusive Boston Tourism Campaign, among other projects. Michael, thank you for joining me. MICHAEL: Thanks for having me. CHAD: I'm curious about the GK Fund. When did you start the Fund? MICHAEL: So, at the time, I was working for the Israeli Foreign Ministry, and I was working with venture capital firms, private equity firms. And I was representing over 200 Israeli companies in New England, most of them startups. And my wife is Black; my family is Black. I've been close to that community for a long time. And especially in the venture capital world, I started to see some real disparities amongst other disparities in general everyday life, but it was particularly bad in the VC world. And so Colette being a mentor and a friend of mine, Colette Phillips, I approached her, and I said, "Hey, what do you think about starting this fund, this non-profit fund?" And her and Andre Porter, who is our other co-founder who used to be the head of the state's business development agency in Massachusetts, we all decided to band together and start this non-profit. Now, we started the non-profit in December of 2019, so the pandemic hit right as we were creating this organization. And we had a decision to make, do we put this on hold, or do we move forward and accelerate? And we decided to just move forward. CHAD: Well, I'm glad you did. I'm glad you made that decision. Hopefully, you feel the same way. [laughs] MICHAEL: Yeah, I do. CHAD: You're absolutely right. There's a big need here. And I actually have had over the last two months or so a few different guests that are creating VC funds or funds of certain kind that address underrepresented communities, Black, another one was veterans. And there's such a big need. How did you decide what you were going to focus on or focus down into so, for example, focusing on Boston? MICHAEL: For Boston specifically, it had to do mostly with proximity. So I went to Harvard here for grad school. I worked for Governor Patrick. And so, for me, it was natural to stay local, especially during COVID. In my experience, there were a lot of BIPOC, particularly Black-owned startups, that were on paper akin to a lot of other startups in the Israeli world, which were very developed or also in the United States. I'll give you an example; there was a company that I worked with that had a $100 million valuation but had no products, no physical products. They had no revenue, but they had innovation. Now, you and I being very honest, do you think a Black-owned company could get away with that? CHAD: Yeah, no. MICHAEL: There is no way. I knew that; the other entrepreneurs that I've talked to know that. That is a terrible double standard that needs to be fixed. So we look for the same things in BIPOC companies that we look for in other companies because, for the most part, the innovation is there; it's just that the opportunity isn't. CHAD: Yeah. To dig into that a little bit more, I think one might say, well, if they had a founding team that had a proven track record, then maybe. And that's where you get to the fact that it's systemic, too, because if the headwinds are there where they can never get that experience, to begin with, they never get that opportunity, to begin with, then they're not going to have a founding team that has a track record that will be invested in based on just the team. MICHAEL: That is 100% accurate, but it's actually even worse. So we do not ask our founders in the application process for their educational background. But all six of the companies that got grants from us last November they all have their bachelor's, four out of six have masters or higher. And so the cream definitely rose to the top. We had a store owner she owns an online boutique who got an engineering degree from Purdue. And we also have an entrepreneur who was an attorney at State Street, a corporate attorney, and now he's created this startup. And so, in some cases, like in most other areas, these individuals are overqualified. CHAD: So, what is the funding model for GK on both sides of the equation? Where is the money coming from, and then how are you funding the companies? MICHAEL: So we raise money organically like any other non-profit does. So we apply for grants. We take corporate donations. We take individual contributions online. Most of our money so far has come in through corporate contributions. So PNC Bank has been with us since the beginning. They made a very large commitment to supporting racial equity, and they've really stuck to it. The Bar Foundation has been exceptional. And then we've also had a group of individual donors who were actually White women who have started their own non-profit now, and they've also banded together to give us money that we need to re-grant to the companies. We have over 100,000 from the State of Massachusetts to operate a grant program. So money is coming through a number of different avenues. We've issued six micro-grants so far at $10,000 each. We did that in November. We plan to do ten more in the next month. I said in the Boston Business Journal article you can give us money, but you can't park it with us like you could with a donor-advised fund and watch it accumulate interest for 15 years. We're going to take it, and we're going to give it to the people that need it the most. CHAD: And are they grants then? You're using the word grants, so I assume that they are. So you're not doing this in exchange for equity in the companies? MICHAEL: No, no equity in the companies, no convertible notes, just a straight capital grant directly to the company. So I send a message over to our fiscal sponsors at Philanthropy Massachusetts. They send the check directly over to the company. After that, we have the company fill out a survey letting us know what they plan to use it for, but we're not overly prescriptive. And that's actually the way that philanthropy is heading right now is, putting fewer restrictions and barriers in the way. And that's another thing I'll talk about as well is making it easier for companies to gain access. CHAD: So, did you ever consider more of a traditional VC fund model with this? MICHAEL: Yeah, originally, I did. Before the pandemic, actually, I did. So the original purpose or impetus of the fund was to take companies that were coming out of accelerator programs that were underfunded. You have some great accelerators, but you have companies leaving with a business plan and $2,000. In some cases, there are companies that have been through three accelerator programs. They're not getting as much out of it as they should. I wanted us to intervene, find the companies that have the most potential, and make investments. But after COVID hit, it was a crisis. And so, we needed to shift our focus to philanthropy. CHAD: The nice thing about that is then you can do those grants with basically no strings attached for the companies. Whereas if you were taking money from people who expect to get a return on that investment, you wouldn't be able to do that. MICHAEL: That's exactly right. There are organizations out there that say that they're making an impact when in reality they're just making, you know, loans which is not a not a bad thing. But they're issuing loans, or they're taking equity in the companies, that's fine, but it's not what we're doing. -- CHAD: What are your plans for, like, upcoming? Are you going to be continuing with micro-grants, or do you have bigger plans? MICHAEL: We have bigger plans. So I can't say too much right now because we have an announcement coming up. But I will say issues like legal services have come up. There's a constant need for attorneys for any company, whether it's contracts, or locking down real estate, or copyright and trademark, or IP. We are working with a very large prestigious law firm that's really making a generous commitment to our companies. And this would involve us even adding free legal services for an entire year to our grantees. So that's one thing that we're planning to do. And then the other is, and this another function of the fund, is we speak with organizations like Lyft who's donated like $5,000 in ride credits that we're giving to our grantees or Wix, which has given us like 75% off of websites. We work with partners who can also give us other services that we can provide to these companies to try to get them closer to where there's a gap. Giving them capital is not enough. The disparities are too significant. We also partnered with Berkshire Bank, so I can make direct referrals for loans if they need them. But the idea is to really narrow that gap and give these companies the same opportunities that their White counterparts have. CHAD: That's great. So you, as someone who's White doing this work, how do you find yourself in the community? How do you be an effective ally and advocate? MICHAEL: For me personally, my connection personally through my wife and also through my family and my boss. Colette is a pioneer. She's a Black woman in Boston who moved here not knowing anybody. And 30 years later, she's on The Power of 50 and 100 influential lists, but she did that through hard work. And she's worked much harder, I think, than she would have had to if she weren't a woman from Antigua who came here on her own. But ultimately, as an ally, it's my role; it's our role to step in between situations where there's inequity. So if there is a company, one of our companies, for instance, who's having a problem locking down real estate, (I think I use this in the article.), and they're saying, "Well, the real estate agent is telling us they can eliminate our lease at any time they prefer which I know is basically legal." I'll call them up and say, "Look, I'm with the fund. We're backing this company; we support them. What's the situation?" And unfortunately, most of the time, the outcome actually changes. So it's a matter of almost you got to be proactive, and you got to be intentional. You have to use your privilege in the best way that you can. So I think that's how you do it. And then, when it's time to shed a light on these companies, you take a step back, so it's not my role to go out there and promote myself. If anyone asks me, I'm always promoting the companies. So the best thing we can do is be advocates. You can be out front, but at the end of the day, it's about uplifting them, these companies in this case. CHAD: Yeah, that's great. Speaking of that, I was going to ask you, what are some of the companies that you have given the micro-grants to, and do you know how they use them? MICHAEL: Yeah, so we gave our grants to six companies. One is called MustWatch, and MustWatch is founded by Che, and Che, his family, is from Haiti. They are an app. You can actually find them on the App Store. But what they do is they allow you to log in, select which movies and television shows that you watch, and share them with your friends. And it sounds like a very simple concept, but there is actually nothing on the market that allows you to do this. And the idea is that you're collecting data while you're doing this as MustWatch. So at the end of the day, if you have a sample of like 20,000 users on the platform, you gain a lot of valuable insight and data. And that data can be useful for Nielsen or the television networks or movie production studios. I encourage people to sign up for MustWatch because if you spend as much time as I do looking for good movies, you're probably miserable. CHAD: [laughs] MICHAEL: [laughs] I spend so much time doing that. We also have a few online retailers. So we have B. Royal Boutique and So Zen Spa, both of them have doubled their revenue during COVID. They originally had stores. They pivoted during COVID, went online, and really were excellent when it comes to branding and marketing on social media and on other digital platforms. So they've been very successful. We have a company called Black Owned Bos., which is pretty well known here in Boston. They basically focus on organizing and running pop-up shops. And Jae'da, who's the head of the company, is just, I mean, she's a business mastermind. She's brilliant, always finding new ways to innovate. And then we have Our Village, which is focused on community development and housing. And finally, sySTEMic flow, which is a company that helps school districts, educators support Black women in STEM and STEAM fields. So we looked for companies that could pivot, basically. CHAD: And you mean in the face of the pandemic. MICHAEL: In the face of the pandemic, we looked for companies that had success and had a plan and also knew their audience. The main things that we look for…and I should say this too; our application process takes an average of seven minutes. And the way that I did that was I evaluated over 20 accelerator applications. I did a comparative analysis and identified the questions that were either irrelevant or unhelpful for us. And that gave us a very short application for our companies but one that's really efficient. And basically, what we're looking for is companies that have a good business model, have a very specific customer base and target market, and have a strong founder, and also has been undersupported. There are companies that we've identified for our next cohort that by this point in their development would have been venture funded in my experience, at least, had they not been people of color. Mid-Roll Ad I wanted to tell you all about something I've been working on quietly for the past year or so, and that's AgencyU. AgencyU is a membership-based program where I work one-on-one with a small group of agency founders and leaders toward their business goals. We do one-on-one coaching sessions and also monthly group meetings. We start with goal setting, advice, and problem-solving based on my experiences over the last 18 years of running thoughtbot. As we progress as a group, we all get to know each other more. And many of the AgencyU members are now working on client projects together and even referring work to each other. Whether you're struggling to grow an agency, taking it to the next level and having growing pains, or a solo founder who just needs someone to talk to, in my 18 years of leading and growing thoughtbot, I've seen and learned from a lot of different situations, and I'd be happy to work with you. Learn more and sign up today at thoughtbot.com/agencyu. That's A-G-E-N-C-Y, the letter U. CHAD: What has been the most surprising use of one of the grants? MICHAEL: So B. Royal used the grant money to lock down a store in Assembly Square in Somerville. We kind of anticipated they might do that. So Zen Spa they improved their website. MustWatch actually really surprised us. So they went out and got a valuation of their company and then basically worked with a crowdfunding platform called Netcapital to raise more capital. They had a very specific plan, and they had disclosed that plan to us. I just didn't anticipate they would act so quickly on it. And based on the fact that we had given them a grant and all this mentoring and support, their valuation actually went up. CHAD: That's a really smart use of the funds to propel that into a larger fundraise. That's really smart. MICHAEL: I agree. CHAD: So you do this in addition to a day job. [laughs] MICHAEL: I mean, they're both day jobs; it's just, yeah. CHAD: So you mentioned Colette Phillips, the person, [laughs] how about Colette Phillips Communications? -- So The All Inclusive Campaign it really is historic. The genesis of the campaign is that back in 2020, Colette and I applied for an RFP from the City of Boston; it was for a tourism recovery campaign. All of the major cities in the country got this grant money through regional tourism agencies, you know, like they're a special interest niche. And they went to the Feds, and they're like, "Look, we're suffering, travel is suffering, we need a grant," so all these grants went out. The City of Boston actually said, "Look, we want to focus on diverse tourism." So that was perfect for us. We applied, we got the grant. And we brought on Proverb, which is an incredible digital marketing agency and creative design agency, and the Greater Boston Convention & Visitors Bureau. It was the largest contract ever to go to a minority-owned company by the City of Boston, ever, and it was about 1.5 million. CHAD: Which in and of itself for what the City of Boston probably spends on things [laughs] is a little ridiculous that that's the biggest one, but … get beyond that, I guess. MICHAEL: It's insane. It's very upsetting. And it was a long time overdue. In this case, that contract or that RFP was really only supposed to last like one quarter. So all these regional tourism agencies they get their influx of money, a million dollars or a few 100,000. And then from there, they do the campaign, they move on. We are now three mayor's into this. We are four million dollars into this. We submitted the campaign to the city 60 days after they contracted with us; 84% of the contractors on the project are minority-owned companies. And in that 60 days before delivering the campaign, we actually never met in person. So we did this whole campaign virtually from the start. We came in under budget. We came in ahead of time. This is what happens sometimes when you let minority-owned companies take the lead. CHAD: Yeah, that's great. How do you do a campaign like this? I mean, this is why they came to you, the experts, but I think it's important that this message seem authentic and not pandering. MICHAEL: Yeah, Colette is a visionary. She's been talking about diversity and inclusion for like 20 years. There's an article that came out, I think, in 1992 where she was talking about the importance of diversity in the business community. And now it's like microfilm; you can't even find it digitally online. CHAD: [laughs] MICHAEL: She's years ahead of her time. And she's constantly innovating, and All Inclusive was her idea, and she branded it. I think it was a long time coming, basically. This is a culmination of a message and campaign that she's been running her whole life. CHAD: Yeah, I think that that's very powerful. And I think it comes across in the campaign. It seems authentic. I think it would be easy for it to not seem that way. And so yeah, it comes from that place of this was already a thing. It was already brewing. It wasn't just -- MICHAEL: Do you want to hear a story? CHAD: Yeah, I'd love it. MICHAEL: So, most of the media coverage for this campaign was exceptionally positive. There are a few reasons for that. We included all small, locally-owned businesses in the campaign. So you won't find celebrities, no athletes, or anything like that; we may do that later. We also invested...we took 200,000 of the contract, which this was not even supposed to be in there. We actually did ad buys with 19 different local newspapers. In some cases, these newspapers would have actually closed down if we had not done that, and that was just a byproduct of something we felt was important. But amidst all of that, she got invited to do an interview on Bloomberg on the local Bloomberg station. She's on the phone, and some guy who was on the other line, and I won't go into it too much, said, "You know, as a White man, I'm really offended. I don't feel represented in this campaign." [laughs] And she's like, "I've had enough of this," hangs up the phone. [laughs] And this is another part of allyship I think is...naturally, you know, I said, "Look, I'm taking care of this." I wrote a letter to Bloomberg. I said, "This is unacceptable. You need to take him to task." I don't know if he still works there anymore. But that's kind of the role. You have a Black woman who's a pioneer. She just released a campaign. The first thing you should be saying to her is "Congratulations," instead of saying that, all you can tell her is about how being a White man is like, I don't know, a disadvantage? Which is crazy. There are tons of White people in the campaign. I'm White; I'm in the campaign. CHAD: It's so foolish. I don't even want to have to explain it, but the campaign is literally called All Inclusive. MICHAEL: [laughs] Exactly, exactly. It covers everybody, I mean, literally. And it's like, I don't know what you want from us. CHAD: Yeah. And it's not even...like you go to the site it talks about here's what you can do with families. Here's what you can do with kids, kid-friendly activities. MICHAEL: This campaign was also research-based. So we spent 100,000 on research with this incredible company called Heart + Mind. They did a lot of research, and they did a lot of surveying. And the words that came back when describing Boston were unwelcoming, masculine; I think Tom Brady, Ben Affleck, crime, you know, just this kind of machismo unwelcoming environment. And it kind of confirmed some of the assumptions we had, but it was really surprising to see it in the data. So we said, "All right, this is what we're working with. We have to come up with a narrative that counters that because Boston is a majority-minority city, 23 neighborhoods, 60% of the population speaks two languages or more. That ethos is really not accurate. So hopefully, we're doing a good job. CHAD: So if folks want to help, we already said GK Fund is a non-profit. It's coming up to tax season [laughs], so at the very least, even if you don't...hopefully, you care about the cause, but if you just want that tax write-off, I suppose that's another reason to donate. MICHAEL: Absolutely. CHAD: So where can folks do that if they want to learn more and donate? MICHAEL: Visit www.thegkfund.org. CHAD: And are you looking for help in other ways beyond monetary? How can people get involved? MICHAEL: Absolutely. So we're looking for mentors so individuals who feel like they have experience or skills to lend to these companies, and we'll try to deploy these individuals in the best way possible. Obviously, we're looking for partnerships. So if you have a company that you feel has something to contribute or is willing to make a contribution, not monetarily but either with your products or with a discount, we also want to give that benefit to the companies as well. And there are a number of different ways. CHAD: That's great. And if folks want to follow along with you or get in touch directly with you, how can they do that? MICHAEL: You can feel free to follow me on Twitter. It's just @MichaelBenezra, all one word on Twitter. I got a lot of positive messages after the Boston Business Journal article came out and in LinkedIn as well. CHAD: Great. And you can subscribe to the show and find notes and a full transcript for this episode at giantrobots.fm. If you have questions or comments, email us at hosts@giantrobots.fm. You can find me on Twitter @cpytel. This podcast is brought to you by thoughtbot and produced and edited by Mandy Moore. Michael, thanks so much for joining me. I really appreciate it. MICHAEL: Yeah, thank you for having me. CHAD: And thank you for listening. See you next time. ANNOUNCER: This podcast was brought to you by thoughtbot. thoughtbot is your expert design and development partner. Let's make your product and team a success.