Room To Read Founder John Wood On How To Turn Social Impact Into A Startup’s Competitive Advantage

By Lee Williamson

John Wood is the founder of Room to Read, a global non-profit focused on child literacy and girls’ education. The Hong Kong-based organisation boasts the kind of superlative-smashing figures every entrepreneur dreams of. Room to Read’s programmes have benefited over 11.6 million children around the world since it was founded in 2000, distributing 20.6 million children’s books—including 1,300 original Room to Read titles—and training more than 10,000 teachers in the process. It’s perhaps no surprise that Wood remains driven to hit ever more impressive targets. In his former life as an executive at Microsoft, achieving impossible-sounding metrics was part of the job description, as Wood candidly outlines in his first book, Leaving Microsoft to Change the World. The title of the book is something of a spoiler for what came next. A 1998 vacation in Nepal changed everything for Wood. The number of children he encountered without access to books in school left a lasting impact, and eventually led him to leave Microsoft to do something about it. This year, Wood released his third book, Purpose, Incorporated, which uses his business acumen and experience in the charitable sector to recommend how modern companies can do more good in the world. His message is clear: entrepreneurs shouldn’t try to change the world once they’re successful; trying to change the world can be a key factor in why they become successful. “My goal when writing the book was to show that purpose is not antithetical to profitability, which I think has been a view in the business world for way too long,” says Wood. “Too many people think that purpose means giving away the store, or that purpose is something you silo off into an underfunded and understaffed CSR department—a cynical box-ticking exercise” “This book is saying let’s take a radically different approach. Let’s find a way to bake purpose into the very DNA of the company—to actually build purpose into the business model and use it as a competitive advantage.” Below, Wood outlines five reasons why building social impact into a startup from day one can reap dividends for the entrepreneur as well, of course, as doing a lot of good in the world.

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1. Purpose can help you win the war for talent

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Above  A Room to Read student in Zambia. (Photo: Courtesy of Room to Read)

We know that 80 per cent of millennials are now asking, “Is this company part of the problem, or part of the solution?” during their job interviews.

It’s of real benefit to be able to say “Look, this company is really concerned about social causes and this is what we’re doing about it”. Purpose can be used to differentiate yourself in this instance. If you try to differentiate yourself with candidates based only on money, that’s an arms race you’ll never win.

And it’s not just millennials. Purpose is a great way to win the war for talent among people in their 40s and 50s, too. I call these the “mid-career switchers”. They’re people who’ve had a great deal of success in their careers, and they find themselves saying, “Is this it? Is this all there is?” There are more and more people in this situation now. They’re too young to retire, they’ve got enough of a nest egg to take a risk, and they don’t just want to go grind out at yet another business that makes rich people richer.

2. Purpose helps you retain staff

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Above  Children with a Room to Read book in Laos. (Photo: Courtesy of Room to Read)

The average lifespan of a white-collar professional in a company is less than three years. That means most companies have a 100 per cent turnover every 36 months. That’s an expensive proposition. Not just in lost productivity but also in recruitment, training and the time it takes to get someone up to speed. 

Purpose can be used to motivate your staff and help retain them longer. It’s of huge help to be able to say to your team, “Hey guys, we’re not just building this company because it’s going to make money for all of us, we’re also doing it because there are kids that need us.”

For example, Room to Read works with Australian tech company Atlassian. They’re a public company, their market cap is US$8 billion plus, but the co-founders Scott [Farquhar] and Mike [Cannon-Brookes] baked purpose into their model from the very beginning by doing a US$10 download for their starter licence, with all the money going to Room to Read.

They’ve now raised over US$7 million for us. When I talk to Scott he says “Look, at Atlassian we make coding and debugging tools. We’re not a glamorous household name like Uber, Google or Facebook, yet we’re competing against those organisations for talent—they’re trying to poach our best engineers.”

What they’ve done is said purpose is a way we’re going to motivate. Every year, a group of Atlassian employees go to Cambodia to visit Room to Read’s work and come back hyper-motivated, saying “Wow! I thought this was a great company, it turns out it’s insanely great because it helps over a quarter million kids in Cambodia get access to their first library.”

3. Purpose empowers and engages your team

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Above  Room to Read students in Cambodia. (Photo: Courtesy of Room to Read)

Purpose shouldn’t just be handed down from on high; it needs to have a lot of fingerprints on it. It’s motivating for the staff when management says, “Let’s figure this out together. What are we passionate about? What are our customers passionate about?”

For example, we’ve worked closely with Salesforce almost from the beginning. When Salesforce was a startup, Room to Read was a startup. In the early days, I would talk to Marc Benioff directly when I needed something—that’s how old the relationship is. With their Pledge One Percent [a model Benioff established where companies commit to donating 1 per cent of product, 1 per cent of equity and 1 per cent of employee hours] they’ve managed to make philanthropy really fun. Their staff have a certain number of days off a year where they can go do anything they want, whether it’s walking stray dogs or reading books to inner-city kids.

It’s important to make it fun and make it something the company celebrates. That empowers people, and the more you empower the more you’re likely to see lower rates of attrition. People can feel good about going to work every day.

4. Purpose can be a motivator for the entrepreneur

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Above  Students with learning flash cards in Bangladesh. (Photo: Courtesy of Room to Read)

Vicky Tsai, the co-founder of [luxury skincare brand] Tatcha, once told me, “You know, sometimes it’s tough being a startup!” They’re going up against the Estee Lauders and the L’Oreals of the world. There are days it just sucks to be an entrepreneur, she said. 

For every Tatcha product sold, the company gives 83 cents to Room to Read, which puts one girl in school for one day. This ‘Beautiful Faces, Beautiful Futures’ idea is baked into the DNA of the company, and now they’ve funded over 1.5 million days of schooling for girls.

To keep herself motivated, she keeps a photo on her desk of her five-year-old daughter in Cambodia with some of the girl scholarship recipients Tatcha’s supporting. She tells herself, “Those girls don’t want you to have a bad day, Vicky. Those girls don’t want you to sit here and whinge about how tough it is; those girls need to get educated. And the only way they’re going to get educated is if we sell more product.” 

That motivates her enormously, because then it’s no longer all about you. You can let yourself down, but you can’t let down the people you promised to help. She once told me, “My car’s being held together by duct tape, but I won’t fix it until I get to the next million girls.”

5. Purpose can help you attract the right investors

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Above  A Room to Read book in Bangladesh. (Photo: Courtesy of Room to Read)

If you have an investor who cares about getting an adequate return but is also happy with a social outcome, you’re going to have a better relationship with them than if your investor is driven by nothing but greed and cranking out every single possible hundredth of a percentage point of ROI. That’s why purpose can be a screening tool to help you find the right investors.

Ultimately, it’s a long road trip together, and you want to be on that journey with someone who’s going to be a good companion. Purpose can help in terms of attracting those kinds investors—people who have values that are similar to yours and say, “I want to get a fair return from this company, but I also want to feel good about it.”

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