I built language learning applications that reached over 10 million users in the developing world and my brother built a startup that employs only ex-cons in one of the worst neighborhoods in America.
We learned a few things from actually doing this:
TL;DR its really expensive to make products for the 'forgotten underclass' due to many unforeseen issues.
1) Poor areas are overrun with corruption and graft. Its very hard to do the right thing, when individuals with power will actively work to put a bribe barrier between you and your work. Its like these individuals smell out good intentions and attempt to tax them for the perceived weak-minded good intentions. An example would be, after my brother created several successful startups using ex-cons, he wanted to turn the program over to the City. He quickly learned without a politician attached and 'sitting on the board' you couldn't do this. The price of this? Paying him 70% of the donations coming in to support the program. I have numerous examples more blatant in 2nd and 3rd world nations.
2) Economy of Scale. You must serve more customers in order to make up for lower prices the market will bare. This is easy to say and very very hard to do. As you scale, you can't afford more workers, so your quality inevitably goes down. Other things like support, QA and tasks that don't scale past 1:10 user rations become very poor quality, turning off people to the product and making you ashamed of your work.
3) Not knowing what the problem is. You can guess at problems for a class of people you aren't a part of, but its pretty hard to design a new solution for them. Your instincts are often wrong and you have to do a lot of expensive testing and research you can't afford to get the right solution. See problem 2.
4) Distribution to customers. Want to get the product to this underclass? Do they have smartphones? Do they have computers? Often no. How are you going to ensure they see your product let alone purchase it? Maybe they do have smartphones, but they use everything from dumb-phones to android 2.3 devices to Nokia-whatevers. Development for all those things will cost you 5x as much as just making a food iPhone app. (see 2 again)
5) Value offer. This becomes very very hard when your target market is low on funds and often makes anti-self-interest choices. The individual who uses what little money they have to feed their family with fast food is going to pay money for your education app? Its pretty unlikely, they have more pressing needs in their hierarchy that they are often too scared and desperate to solve properly.
6) Their problems can't be solved with software. Often these people have real-world problems that require hands on work and real product to solve. My brother worked very hard to add software where possible but needed to do mostly 'real world' labor to get to his customers. Software is inherently cheap to produce compared to hardware and manual labor.
Finally, this work will eat you away until you have very little left. Your rent will go up as your friends sell their startups. You won't have time or money to rebalance your life with exercise or entertainment. You will becomes socially isolated from those who have the money to support your work. You will put immense pressure on your significant other to either make up your losses financially or support you. You will put your children's future in jeopard. You won't have children. You will see little return on your effort. You will be fighting a society which applauds your effort but is unwilling to help you continue.
In short, you might become part of the class you are trying to help.
One other thing here: credit. It relates to #5, but drastically increases the cost of doing business.
The "unexotic underclass" tends to not be very prompt at paying their bills. They often don't have credit cards (or even enough credit to get one), so the typical billing mechanisms are out of the question. Things get prioritized, and a lot of people will choose to let their bills go to collections before they pay them (if ever).
Sending debt to collections means you only get about 50% of what you're owed (and sometimes far less). It's usually not even worth going after people for less than $100. If this happens to even a small percentage of your customers, it can wipe out all of your profits.
There's a reason nobody goes after the "underclass" at any scale: even a minor downturn in the economy can cause a large spike in the payment delinquency rate. The only companies that seem to have success with these customers border on criminal enterprises: places like payday loan shops, pawn shops, etc. are popular because they provide temporary relief for the biggest problem most of these people have: where is the money for rent going to come from?
>There's a reason nobody goes after the "underclass" at any scale
There are plenty of companies that go after the underclass at scale - things like "no bank needed" debit cards, prepaid phone cards, payday loansharks, western union-style money transfer businesses, public transport companies etc.
Eliminate things from the list that are payment at service time (fast food, transit, stores, etc).
Even cable, America's biggest luxury addiction, has some trouble obtaining payment.
However what I'd like to see far more is a systemic solution. Instead of permatemps, part time workers, new hire probation (sort of), or even wellfare, 'unemployment' should mean more like a new deal program. There will be something for all workers to do, preferably in/near their training. If there is not, based on aptitude, retraining will be subsidized while more generic work is scheduled around the training. All initial hires/temps/etc will be paid for at full pro-rated cost (but less inherent risk/mutual solidity) by companies in question. The government will also pass on only a discounted rate of payment (but full benefits otherwise) to encourage the worker to land a job outside of the support system.
Very well said. I greatly respect you for what you are doing/have been doing. It's obvious from your comments that you are not just talking nice, but have been there.
I'm pretty sure no one has responded because no one knows how to respond to your bleak ending. Probably because it exposes our selfishness. I know I don't know what to say.
Do you have any further info about the work you and your brother are doing/have done?
I couldn't continue, partly because I had predetermined risk going into this (Strongly recommend a dollar figure in loss and time limit before you try helping society) and partly because I just burned out.
Google reached out to me, and after a short interview made me an offer.
My significant other and I are now officially 1%er DINKS over night and are constantly working on what it means to continue to do good in our situation. She has focused on using her position in management to find unemployed talented folks to add to her teams. Right now she distributes nearly $1m in total yearly income to very talented individuals who also tried to do good but found themselves unemployed and in the same position as myself.
I have been trying to do honest work and learn at Google, while studying a society that is post-resource -- specifically how it reduces conflict and issues. I try to think about how some of these structures could be applied in places with need.
My brother, with a family, is walking on water. Over the last 2 years he has put over 100 ex-cons and homeless through his program with 0% recidivism. At a total cost of 40k per person this reduces their cost to society by 50% in the first year then often 100% by the second year.
He is, however, burned out and looking for an exit. His real world meaningful labor doesn't map as well to easy Silicon Valley hiring and he continues to try to find a way to move forward.
My great worry is we are doing what our educated class always has done. We try to help, get scared off when we get too close, then retreat to our safe enclaves of high pay and social walls -- then close the door behind us. I feel so guilty about this it keeps me up at night. My only hope is that we can somehow continue to thrive, but keep the door open to anyone who wants to be a part of it.
Don't feel guilty; it's not a problem that can be solved overnight or only by a small handful of wealthy people. It's going to require a shift & change of thinking by society in general. It's going to happen very slowly and it starts with people like you showing compassion & understanding; instead of making comments like this[1].
When you have conversations with other wealthy & powerful people, you'll be able to correct them when they make negative stereotypes comments about the poor. Slowly, very slowly, your knowledge of what it _really_ means to be poor and all the corruption around it will help others at your economic level understand what it's like down there. That kind of knowledge has an effect on decision-making and when wealthy & powerful people make decisions, it affects us all. Hopefully some people in your social circle have shown at least a little interest in knowing about your experiences.
Consider writing a book. It sounds like you have enough material to do it.
I'm hoping that new, more effective and cost effective educational methods like Khan Academy and the like at least help keep that door open. Gotta get everyone internet access though.
Maybe that's not your fault. Maybe it was wrong (albeit forgivable, of course) to blame the other people who did that. Maybe they all did it not because they're bad (or weak) people, but because the system is set up in a way that there's really only one possible outcome.
Maybe voting to change the game is the answer, rather than playing with crooked rules.
Unfortunately 40k per person isn't likely to get the attention of the someone trying to maximize the amount of good done per dollar (those of us who follow GiveWell) when the money would go further with the charities they currently recommend. The "exotic underclass" has the "advantage" if you can call it that of benefiting a lot from small amounts of money per person, so you can help more people.
We need different arguments for why we should help people closer to us. One reason might be that it's less abstract than people in a different country that you'll never meet, but I think that argument needs to be developed.
It already costs the city 70k per person per year to go through a recovery program, this reduced it to 40k the first year then 0 the second year -- netting large municipal and state savings.
That's an excellent reason why the city or state should fund it.
For a private charity, net gain is one person helped and 70k / year spent with average efficiency by the government on something else (or spent by taxpayers if it's returned). That's somewhat hard to judge versus alternatives.
I'd like to find out more about your brother's program. How does he find work for them? What are the key barriers to their finding and keeping effective employment? What are the important factors that contribute to the 0% recidivism he sees?
He starts his own small businesses and employs a set of ex-cons while mentoring them. He then turns management over to the most talented over the year, and finally hands the entire company over to the most senior person in the program. Meanwhile ownership is retained by the parent non-profit. He has done it three times and the key to low recidivism is his hands on approach. He spends time with every worker, has a magnetic personality, and is able to speak and inspire people who are at the very bottom.
This is awesome. It probably won't work without him. Maybe a serious vacation and renewed focus on work-life balance & delegation could help with burnout? I've been very surprised at how much those can help.
> An example would be, after my brother created several successful startups using ex-cons, he wanted to turn the program over to the City. He quickly learned without a politician attached and 'sitting on the board' you couldn't do this. The price of this? Paying him 70% of the donations coming in to support the program. I have numerous examples more blatant in 2nd and 3rd world nations.
That sounds like an excellent situation to gather the evidence and get some newspaper coverage.
Guess who's more important to the newspaper: this one guy who encountered some "you were naiive to not expect this" corruption, or the senior city hall politico? And what did he do, anyway, ask for a seat on the board in return for his help? and that position comes with a salary? We can't run that story, quit wasting our time.
Its more that its never explicitly stated at any point in time or by any individual.
But if you've ever worked at this level, you know the connections made by those brokering deals or in close proximity to dealmaking is often the only way to find success. You need these people to connect you with the wealth or opportunity, and they charge for that connection.
There is a difference between stopping an instance of a problem, and an entire species of problem. Just because the species of problem (municipal political corruption) persists in various forms, doesn't mean any individual corrupt politician will get off scot-free. They go down all the time, removing the particular barriers they had put in place.
Do you think it's safe to target smart phones on the assumption that they'll be reasonably ubiquitous reasonably soon? And is there any major price threshold where a decision goes from being a casual purchase (only requiring reasonable confidence that the product might be useful) to being a serious decision that might be nixed even if the product is attractive?
Yes, the market is shifting towards affordable smart devices, but there is still a lot of fracturing that makes development hard enough even for premium audiences.
I think that finding this classes problems, a good solution, and mapping them to software is the real problem -- the device proliferation and connectivity is just a compound issue.
There are others that believe the inverse though, devices and connectivity proliferation are the primary problem and solving it will allow for the next generation of startups to address this classes real-life issues without the hardware overhead.
Politicians trying to leech off entrepreneurs trying to help the poor. Where are the folks that say Libertarianism can't work because we can't expect private enterprise to help the poor, and only a centralized government has the incentives to do it?
I applaud your and your brother's efforts. Hopefully this will help people realize who has an incentive to keep the poor poor and who actually wants to help them.
We learned a few things from actually doing this:
TL;DR its really expensive to make products for the 'forgotten underclass' due to many unforeseen issues.
1) Poor areas are overrun with corruption and graft. Its very hard to do the right thing, when individuals with power will actively work to put a bribe barrier between you and your work. Its like these individuals smell out good intentions and attempt to tax them for the perceived weak-minded good intentions. An example would be, after my brother created several successful startups using ex-cons, he wanted to turn the program over to the City. He quickly learned without a politician attached and 'sitting on the board' you couldn't do this. The price of this? Paying him 70% of the donations coming in to support the program. I have numerous examples more blatant in 2nd and 3rd world nations.
2) Economy of Scale. You must serve more customers in order to make up for lower prices the market will bare. This is easy to say and very very hard to do. As you scale, you can't afford more workers, so your quality inevitably goes down. Other things like support, QA and tasks that don't scale past 1:10 user rations become very poor quality, turning off people to the product and making you ashamed of your work.
3) Not knowing what the problem is. You can guess at problems for a class of people you aren't a part of, but its pretty hard to design a new solution for them. Your instincts are often wrong and you have to do a lot of expensive testing and research you can't afford to get the right solution. See problem 2.
4) Distribution to customers. Want to get the product to this underclass? Do they have smartphones? Do they have computers? Often no. How are you going to ensure they see your product let alone purchase it? Maybe they do have smartphones, but they use everything from dumb-phones to android 2.3 devices to Nokia-whatevers. Development for all those things will cost you 5x as much as just making a food iPhone app. (see 2 again)
5) Value offer. This becomes very very hard when your target market is low on funds and often makes anti-self-interest choices. The individual who uses what little money they have to feed their family with fast food is going to pay money for your education app? Its pretty unlikely, they have more pressing needs in their hierarchy that they are often too scared and desperate to solve properly.
6) Their problems can't be solved with software. Often these people have real-world problems that require hands on work and real product to solve. My brother worked very hard to add software where possible but needed to do mostly 'real world' labor to get to his customers. Software is inherently cheap to produce compared to hardware and manual labor.
Finally, this work will eat you away until you have very little left. Your rent will go up as your friends sell their startups. You won't have time or money to rebalance your life with exercise or entertainment. You will becomes socially isolated from those who have the money to support your work. You will put immense pressure on your significant other to either make up your losses financially or support you. You will put your children's future in jeopard. You won't have children. You will see little return on your effort. You will be fighting a society which applauds your effort but is unwilling to help you continue.
In short, you might become part of the class you are trying to help.