Garry Vaynberg '05 won as part of a five person team an award from the 2004 Global Social Venture Competition (GSVC) for his business plan IAM, LLC.
I caught up with Gary to hear how he developed the business plan for IAM.
What is the idea behind your company IAM, LLC?
The idea is to go into urban settings, take properties that have been overlooked by traditional developers for a variety of reasons (such as contamination or bad neighbourhood conditions) and convert them into usable urban real estate. The reason this idea is timely is because developers are running out of space in major cities, especially New York, and need to turn their attention to dealing with the abandoned buildings and sites that are available in the city. However most developers are not set up that way.
How did you get the idea?
It was a sort of coincidence. Last year I became interested in the GSVC but I didn't know what the idea would be. I wanted to try something different, something other than a traditional business plan, and I thought business school was the right time to try a venture with a social aspect. I have also owned some real estate property which gave me exposure to the industry that I was interested in. Coincidently at the beginning of the year, I met with a high school friend who was in the real estate program at New School University in downtown Manhattan, Candice Newman. Candice had an idea for converting a contaminated building in Harlem. We talked and realized that we can work together and use her development skills to do something bigger with more than just one building. The IAM, LLC evolved as a systematic way of dealing with abandoned urban sites and brownfield sites.
How does the idea for IAM, LLC fit into the Global Social Venture Competition requirements?
Well, it provides significant financial returns to the neighbourhood by providing jobs in the area, cleaning up the contaminated site and allowing businesses to occupy the vacant and often boarded up retail at the street level. For example, the building in Harlem that inspired us to start IAM was abandoned with 100 vacancy. But after redeveloping the building (which is in the process of being done), there will be four businesses, a religious organization, some retail and a few local professionals moving in.
As a result of this conversion, the building will stop being a gathering place for undesirable people and will be a functioning part of the city fabric providing the opportunity for jobs and retail. In addition to this being a good business idea, this is a profitable idea with benefits to the community.
What was the total prize money the GSVC offered? Was that enough to launch the venture?
$25,000 was the total prize money and that was certainly not enough to launch IAM LLC. But you have to know that the great thing about the competition is not the money, really, it is the people you meet. There are great contacts that come your way through winning this competition and they are not what you think they are. They're not social doves but they are real business people such as investment bankers or influential real estate people from major firms who got interested in the idea and had several meetings to decide how they can become involved. The contacts you meet far outweigh the prize money. There are a lot of funds willing to invest in your idea and the GSVC gives you that exposure.
Is IAM LLC a reality now?
After winning the competition, my team, which was composed of five members, decided that the idea would be better served with two separate companies. One company serves as a consulting firm for communities and local governments who are looking to convert brownfield sites and a second company focuses on development of brown field sites in urban settings.
I am not going to be involved in the company full time. My role will be a strategist and I will advise on financing sources and individual projects. However, the people who entered with me have quit their jobs and are doing this full time.
Was it challenging to write a profitable business plan that also had a positive benefit to the environment and society? Were those opposing values?
Not at all, in my own view not every business idea will create both social value and profits, but with this venture you cannot be profitable developing urban brownfield sites without paying attention to social issues. For example, in order to redevelop a building you need to get 100 support of the neighbourhood and the local government to help in this effort. One of the ways to get city officials and residents on your side is to offer them a stake in the project by offering them a share of the profit and providing incentives for them to work with you. That's a unique idea. It's profitable for the company and the community but very difficult to achieve without getting the neighbourhood on your side. I look at it as part of the business strategy to have the right setup to give equity to the neighbourhood by paying a little for the land and cleaning up the site. In return, we get to build real estate in an urban setting which creates value.
What was the time commitment involved in writing the GSVC business plan for IAM, LLC?
In our case five people were involved. We worked on it from September 2003 right up to the competition deadline and we met on a regular basis. We were committed to the idea.
What is going on now with IAM LLC?
Well, it took a significant amount of time to launch IAM because we all had to agree on the setup. It was a personality issue more than anything with questions such as do we want to retain the profits in the company or send checks to investors in the LLC?
Why not be an entrepreneur who follows his dream and work on launching IAM LLC full time?
At this point in my life I would rather be a professional in banking before taking higher risk in IAM. Personally I am not ready to do it. Part of that is because I have had my own businesses before and I know the risk.
Do you think you can reach greater success in your career in banking after participating in the GSVC?
Probably, because entering the GSVC competition made me realize that social issues are much more present in our daily lives than anything else. Most professionals ignore the social impact of business and if you do pay more attention to it you can become better at what you do, which is in my case banking. I have a much better understanding of the deal once I have taken the social issues into consideration.
Any closing thoughts on being a winner and the GSVC experience?
The biggest takeaway is that I was surprised at the number of very successful professionals in the business world whom you don't necessarily associate with social causes who took a very strong interest in benefiting society through business and who genuinely believe in doing well in the world through business. It doesn't necessarily have to come at the expense of profits. Before entering the GSVC competition I was more sceptical and assumed that caring about social and ethical issues could take away from profits. I don't think it's necessarily true in every case anymore and when you do make both work it's a pretty good feeling.
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