What is your elevator pitch?
I was working in New Orleans after the oil spill in 2010 where I witnessed the sharp decline in sales that small businesses face after the disaster.
We designed Recovery Pledge to solve this problem by connecting you, a consumer, with small businesses in need. For example, instead of buying that kitchen table from a big box retailer - we want you to buy it from a small business in New Orleans right after Hurricane Katrina. By stabilizing small businesses - we’ve stabilized the economic engines of cities.
What is the innovation?
To redirect consumption patterns to disaster areas.
Are you a charity?
What makes you different from a charity?
Recovery Pledge takes a purely private sector approach to disaster recovery. From Hurricane Katrina and Sandy to the recent fires in California and Colorado, disasters just happen. When they occur, charitable organizations respond with temporary shelter, food, clothing and social services. Our mission is focused on reducing the number of small business failures after a catastrophic event. We are not a charitable organization that sends money or aid. Instead, we offer a marketplace whereby you can support the local businesses by purchasing their products and services.
What’s your story?
I spent some time in New Orleans after the Deepwater Horizon Oil Spill in August, 2010. After talking to a number of small business owners it became clear that disaster recovery efforts fell short of expectations. I quickly realized that there isn’t a viable solution for small business owners who are the economic engine of cities.
When I was in the Gulf, I had the chance to interview small business owners to better understand their needs immediately after a disaster. I will never forget one interview in particular. There were a number of oyster farmers and seafood distributors that lost most of their commodity. This occurred because of the fresh water diversion techniques used to push back the oncoming oil-laden salt water destroyed their oyster farms. These small business owners, some already near credit default, needed cash or “purchase orders” to replenish their oyster farms. After this experience, I thought the best recovery program would simply help small businesses to keep selling their products and services immediately after a disaster.
How badly are businesses affected by disasters?
According to the Insurance Information Institute, up to 40% of businesses affected by a natural or man-made disaster never reopen.
What is a recovery pledge?
Before a disaster occurs, small business owners will build profile pages on recoverypledge.com and enter descriptions of what products and services they will offer to consumers. In the event of a disaster, the marketplace will be activated and consumers will be able to take the lead in disaster recovery by purchasing recovery pledges. These recovery pledges simply represent same-as-cash vouchers for the goods and services that small business owners sell on a daily basis.
What questions did small business owners raise when you pitched the Recovery Pledge concept to them?
I hear a lot of the same thing from small business owners. Here is short list of a typical response: "If you can bring me more customers in hard times, sign me up" or "will this reduce my insurance premiums?" and my favorite comment, "I am not very savvy with technology, but I am sure my kids can figure this out". I also held a few proof-of-concept meetings in early 2012. Small business owners reiterated that they are often offered low-interest loans after a disaster when what they really want and need are customers. Most small business owners were concerned with the rapid decline is sales they would have to overcome in order to survive.
For consumers, the pitch has always been embodied in the Recovery Pledge service mark, which is "consume with a conscience". Meaning, every time you shop – whether you are passing through the aisles of a big box retailer or browsing the Recovery Pledge marketplace – you make a choice. More importantly, this choice shouldn't be taken too lightly because that product or service you purchase could serve you personally while simultaneously helping save a small business get back on their feet after a disaster.
Has your concept been fully developed?
The Recovery Pledge business model is not too far from the likes of Groupon or LivingSocial. However, these organizations negotiate large discounts (usually 50-90% off) on products and services with businesses. Recovery Pledge will let the small business owner set the price of the product or service. We will not negotiate large discounts because our goal is to stabilize a small business’s sales receipts immediately after a disaster, not discount them. Also, a small business owner will only be allowed to sell recovery pledges immediately after a disaster for up to six months and only a pre-determined number of recovery pledges will be sold.
How will you know which communities and merchants need Recovery Pledge?
The formal disaster declaration process is managed by the Federal Emergency Management Agency (FEMA), which is directed by the U.S. Department of Homeland Security. In the U.S., natural disasters have been declared in every state and territory. Statistics on disaster declarations are regularly collected and can be used to help the Recovery Pledge team prepare for disasters. In 2011, the Recovery Pledge team prepared tables (1), (2) and (3) analyze the number of U.S. disaster declarations by state, incident type (fire, flood and etc.) and decade from 1953-2010. You can download these tables on the Press Kit page on recoverypledge.com. These simple analyses will help the Recovery Pledge team target the market its services with improved accuracy. Please visit the following website to access the full data set: http://www.data.gov/raw/1491/.
Did I see Recovery Pledge crowd-funding on Indiegogo?
YES! We were part of the Philips Innovation Fellows Competition. Indiegogo and Philips provided us with the unique opportunity to validate the idea of letting consumers take the lead in disaster recovery. The response was overwhelmingly positive.
How large will the Recovery Pledge marketplace be and what kind of sales do you project?
Good question. It will be company policy to involve the community (e.g., local elected leadership, the chamber of commerce and community stakeholders) at the start of the business development campaign. Recovery Pledge will employ a referral-based business development strategy that uses a revenue-share model with 501c designated organizations to create strong working relationships with small business service providers. Basically, we will strive to achieve a 25% chamber-member acquisition rate using our revenue-share agreement in any region we are actively pursuing. Our marketing efforts will depend on the number of revenue-share agreements we can sign with community organizations. Also, small businesses will be able to apply independently to ensure they have equal opportunity to learn more about the social enterprise services.
What kinds of goods and services work best on the e-commerce marketplace?
We envision local restaurants, machine shops, artists, mom and pop shops and everything in-between. Recovery Pledge will encourage all types of small businesses to join as long as it is a legal entity and verified by our team.
Are there any constraints on how many recovery pledges a small business can offer?
Yes. Small business owners will be limited in the number of recovery pledges they can offer. This ensures that the consumers’ good deeds go to stabilizing the company’s sales receipts and not to inflated profits or misuse. The formula we designed is a simple, three-month average of the small business’s sales over three consecutive years. Here is an example:
Year Small Business's Total Sales
Three Year Average: $1,500,000 Total Sales / 3 Years = $500,000
$500,000 / 4 = $125,000, which is the three-months sales average number that is used to determine the maximum amount of recovery pledges allowed for purchase. This means that a small business would be able to offer a total of $125,000 in recovery pledges in the event of a major disaster. So, if the small business offered $50 vouchers, it would need 125,000 / 50 = 2,500 consumers to purchase recovery pledges.
What if the business has not been up and running for more than three years? Are these companies able to still join Recovery Pledge?
Yes. We will work with the small business to project sales based on conservative growth estimates.
Do I have to wait until after a disaster occurs to buy a recovery pledge?
Yes. This way, the recovery pledge you purchased satisfies your consumption need and helps a small business stabilize their sales immediately after a disaster.
What if I purchase a recovery pledge and the product or service is not delivered to me?
All transactions will provide the customer with an approximate delivery date, in addition to allowing you to indicate if you would like to receive status updates about the disaster recovery process. We will be able to determine if the small business is unable to recover from the disaster by monitoring the recovery process.
Recovery Pledge will also collect the small service charge on each recovery pledge purchased to provide a limited money-back guarantee to our customers in the event of a small business failure.
What if a disaster never happens?
That is what we hope for, but it is far from reality. The Recovery Pledge team is just as concerned with disaster preparedness as we are with post-disaster economic recovery. Small business owners who join Recovery Pledge will receive guidebooks and monthly e-resources to help them build a social networking strategy that successfully organizes their customer base.
Does Recovery Pledge offer training to help prepare small businesses for a disaster?
Yes. Recovery Pledge will provide its members with a guide on how to develop a robust social media networking strategy. This strategy is designed to identify and collaborate with consumers to encourage purchasing recovery pledges immediately after a disaster.
What kind of customer support will be included in a small business’s membership?
The goal is to speed up the disaster recovery process by letting consumers take the lead. The Recovery Pledge team will automate the e-commerce functionality, but we will also be available via phone and email to answer any questions that arise. You can reach the founder, Christopher Girdwood, at email@example.com.
How are the payments between the consumer and the small business managed?
The small business owner will receive payments directly from the consumer by way of the recoverypledge.com e-commerce platform. Recovery Pledge will not hold any payments in escrow because it serves as a pass-through, not as an intermediary.
How will you measure your impact?
Recovery Pledge will also serve as a data repository by documenting (i.e., quantitatively and qualitatively) the disaster recovery process in communities. Using the Guide to Actionable Measurement, Bill and Melinda Gates Foundation, Recovery Pledge will measure consumption outcomes and impact on small businesses and the communities that support them. Below is a quick summary of the measurement process, which is not all-inclusive:
Inputs: the resources employed to implement activities (e.g., consumer buying recovery pledges, the value of those pledges, the total capital infusion into a community);
Activities: the actions taken by the small business (e.g., product/service creation and delivery, equipment purchased, cash flow stabilization);
Outputs: the direct and early results of the activities (e.g., small business retention post-disaster, main street revival, community stabilization and growth);
Outcomes: the intermediate observable and measurable changes that serve as progress toward an impact for the targeted population (e.g., regional economic resiliency indicators by industry sector, per capita income, employment);
Impacts: the ultimate sustainable changes attributed to an action or combination of actions (e.g., global and environmental stewardship, sustainability, consumption patterns, GDP).
How do I know that you have the resources to pull this off?
The staff will directly market Recovery Pledge to small business owners through a revenue-share partnership model with chambers of commerce, economic development organizations and small business service providers. Recovery Pledge customer acquisition campaigns will begin in a few select cities that are prone to natural disasters to start and it will be expanded as our resources grow.
Like most start-ups, we need the help of individuals like you to make us better. As long as we continually engage our customers, both small business owners and consumers, we can reduce the time it takes for a small business and a community to recover from a disaster.
How did you come up with the Recovery Pledge name?
We chose the term “pledge” because it embodies a solemn promise between the small business owner and the consumer. The “recovery pledge” name has social, environmental and financial merit that represents a call to action in the event of a disaster.
Are you nervous that someone will copy your idea since you published everything required to launch Recovery Pledge?
We are not worried about folks copying this idea. At the end of the day, we are helping small businesses and communities recover from a disaster. Long live the open source ideology and all that it has given us.
Where can I ask more questions?
Feel free to contact Christopher Girdwood with questions at firstname.lastname@example.org. Thank you for your time and please support us by buying a membership perk for your favorite small business. Here’s the link to our website and please connect with us through social media: www.recoverypledge.com.