10Q: Yunus Finds 'Happy' Profit in Yogurt
Muhammad Yunus and the bank he founded, Grameen Bank, won the Nobel Peace Prize in 2006 for helping to establish the microcredit movement across the developing world. He spoke recently with Margaret Collins, a personal finance reporter for Bloomberg News in New York.
Q: What is "social business?" I bet it doesn't mean what it sounds like.
A: Social business is business that solves problems rather than make people money. The simple idea is by making money you make yourself happy. So the happiness is measured in the money that you make. I'm saying there's another source of happiness. By making other people happy, you become happy. Somehow in the business world we have not allowed that happiness to sneak in. We kind of put a wall that 'oh, that's something you do philanthropically.' I said, 'No. We can do it as a business.'
I'm calling this "social business," because the profit-making business is about me. It's me-centered. Social business is nothing about me. It's all about others.
Q: Will people be interested in that?
A: I say yes. People have selfishness at the same time people have selflessness. It's all built into the human being. You don't have to bring it from outside. You don't have to go to the church to get the preaching so that you feel guilty. No. If you put it in our textbooks, we'll grow up knowing that there are two kinds of businesses. One I can make money and get happy, and another one where I make other people happy and I make myself happy by doing that.
Q: Is it one or the other?
A: You can do category 1 business and category 2 business at the same time, but what proportion? Ninety percent profit-making business and 10 percent social business? Fine. Or somebody else says: I'll reverse it and do 10 percent profit-making business and 90 percent social business. It's all about how you want to get happiness.
Q: What social businesses have you started?
A: We have done joint ventures with big companies, like Danone. We have a joint venture, Grameen Danone, and we produce yogurt. This is a special yogurt for malnourished children. The nutrition situation of the children of Bangladesh is very serious. Half the children are malnourished. So we created this yogurt, put all the micronutrients into that yogurt and made it cheap, so the children of poor families can eat it. Danone will never take any profit out of the company. Grameen will never take any profit out of it. It's all dedicated to solving the problem of malnourishment in Bangladesh. It covers its costs.
Q: What do the investors get?
A: Owners can take back their equity, and that's it. They will continue to own the company but no dividend pay. They do not intend to take the dividend because their happiness is seeing healthy children in the neighborhood.
Q: So they get back what they put in, but no price appreciation or dividend?
A: Exactly. Nothing extra. Danone has done that. Now other companies are coming up.
Veolia, a French water company: we have a joint venture to bring water to villages where water is not available. That's a social business. Veolia is not doing the business to get them rich. They have lots of other businesses to make them rich. Here, this is a social business.
Q: A lot of companies have "corporate social responsibility," efforts. What's the difference?
A: CSR, philanthropy, has a limitation. Every year you have to give fresh money to keep it going. If it is a business it runs by itself, it is sustainable.
Q: Because you're reinvesting it?
A: You're reinvesting it all the time. In CSR you'll be giving free water to everybody. Then, you need more money to give free water the next day.
Q: So you'd make the water cheap or the yogurt cheap.
A: Yes. So that everybody can afford.
Q: And cover the costs.
A: And you cover the costs.