Unreasonable Group's Daniel Epstein on Hong Kong's start-up culture and being his own boss
Brains behind social enterprise start-up accelerator finds 'it's not OK to fail' in Hong Kong, in contrast to the US, and says he sees his role as designing 'solutions for any problem worthy of my attention'
Two days before this interview, entrepreneurship guru Daniel Epstein posted on Twitter: “To better ensure that the press you get is in fact good and accurate, do everything you can to avoid interviews.”
Evidently, the 29-year-old co-founder of Unreasonable Group - a US-based organisation that sets up and incubates new businesses with social or environmental agendas – considers himself well-armed against media mendacity. Then again, someone who started three companies before he left university and is convinced he has the model to solve the world’s biggest problems is not going to be lacking in confidence.
Epstein has flown over from Boulder, in the US state of Colorado, for the launch of the two-month Social Enterprise Summit, an annual event that encourages Hong Kong businesses to play a role in making the world a better place. Over the course of a week, he has given public talks and spoken to senior corporate executives about his “unreasonable” approach.
The Unreasonable Group encourages “a healthy disregard for the impossible”; the name comes from a line in George Bernard Shaw’s Man and Superman: “The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man.”
Epstein says he founded the Unreasonable Institute – the nucleus of the present-day Unreasonable Group – in 2010 with two fellow graduates from the University of Colorado at Boulder with the goal of helping businesses that have solutions for major social and environmental ills become bigger and better.
It runs intense five-day- to five-week-long accelerator programmes in which 10 to 20 participants live together and discuss ideas with mentors picked from the likes of Google and Stanford University. They also get the opportunity to meet potential investors.
“Graduates” include Edom Nutritional Solutions in Kenya, which distributes nutritional packets to people suffering from malnutrition in the East African country, or Liberation Cocao, set up by a former refugee who wants to revitalise Liberia’s cocoa industry and create jobs for former child soldiers in the West African country’s civil war.
The institute, which takes a small stake in the participants’ businesses to help cover costs, is among a number of organisations that help businesses with a social or environmental agenda scale up - others include the Schwab Foundation, set up in 1998 by the founder of the World Economic Forum - but it is one of the most ambitious. It aims to run accelerators in 100 countries and to help each participating company get to the size where it can affect the lives of a million people. Between 2010 and 2014, 93 ventures from 58 countries have attended the accelerators held in Boulder.
There are other aspects that make it stand out, such as the section of the institute’s website entitled “our failures”, where it admits to things such as the fact the institute itself is not financially self-sustainable. The section is meant to keep the team humble and to ensure that they learn from the mistakes, according to the website.
This is an aspect in which Hong Kong’s start-up culture differs from America’s, Epstein finds. Here, there is a much lower acceptance of failure. “People in the US will invest in you if you have admitted to failures. If you have failed three times, they will think, yeah, it’s time you get it right. You have learned your lessons. Here, it’s not OK to fail,” he says.
Still, he is keen to increase the group’s exposure in Hong Kong, which should make a logical base for accelerator programmes focused on solving issues common to many crowded cities with ageing populations. Epstein also wants to see a permanent Asia Pacific branch of the institute soon, though the group has yet to decide on a location. So far, there are two permanent offshoots of the Unreasonable Institute, in Uganda and Mexico, and short-term “Unreasonable Labs” have taken place in seven other countries, including India and Japan.
Epstein doesn’t quite know why he was convinced from an early age that he wanted to be his own boss. He comes from a family of doctors and he is the only one of three children who hasn’t gone into medicine.
“I’ve always known I wanted to run my own business but when I was younger, I didn’t know what I wanted to do exactly. Then one day, while I was studying philosophy in college, I decided that as an entrepreneur, my role is to design solutions for any problem that is worthy of my attention,” he says.
He originally signed up for business school in Boulder but switched to philosophy because he “didn’t want to be told what to think, but how to think”. He also reckoned he could skip a lot of lectures and still graduate, which he did. The spare time was used to launch three successive companies with budding entrepreneurs among his fellow students, including one that helped out-of-town students navigate the bureaucracy of qualifying for lower, local college fees.
Today he is still busy setting up new companies. Apart from the Unreasonable Institute, the Unreasonable Group has a number of for-profit subsidiaries. Unreasonable Capital is a new division that is in the process of raising up to US$20 million for investing in the kind of companies that enter the Unreasonable accelerators. Unreasonable Media makes documentaries to combat the persistently negative media coverage of certain countries. For example, it is wrapping up a series about entrepreneurial success stories in Africa that will be carried on American cable television. There is also a new, non-profit arm called The Girl Effect, sponsored by Nike, that runs accelerator programmes for companies with products that can help the lives of girls living in dire poverty.
Epstein is not involved in the day-to-day running of all seven Unreasonable companies. “I am good at starting companies, but I hire people smarter than me to run them after the first year,” he says. One of these is Jeff Hoffman, chief executive of Unreasonable Media, who was one of the original founders of Priceline, the online travel company with a market capitalisation of over US$66 billion.
Epstein now spends a lot of his time travelling around the world to raise the profile of the Unreasonable Group. Becoming a public face has not made him wealthy, he says.
“I own a substantial stake in Unreasonable Group but there is no exit plan,” he says. Apart from Unreasonable Capital’s managed fund, no outside investor holds shares in Unreasonable Group, he adds.