Daniel Flynn On The Secrets Of Successful Social Enterprises & Effective Leaders

Determined and resourceful, Daniel Flynn is the co-founder and managing director of one of Australia’s most successful start-ups, Thankyou.

Thankyou is a social enterprise that exists to see a world where not one person lives in extreme poverty. Daniel co-founded Thankyou at the age of 19, and today 14 years later, Thankyou’s products are stocked by major retailers in Australia, with every product contributing to helping end global poverty. To date, Thankyou has raised over $17 million to impact the lives of people across 31 countries.

Daniel discusses some of the key lessons learnt on their journey in creating one of Australia’s best known social enterprises, while sharing insights into giving models, unintended consequences and impact investment.

Highlights from the interview (listen to the podcast for full details)

[Tom Allen] - Dan, please tell us a little bit more about your background and what led to your interest and passion in social enterprise?

[Daniel Flynn] - It's an interesting case, because my background was definitely not in social enterprise. I was really interested in business from a young age. One of the earliest stories my mum told me is I was running around the kindergarten trying to sell helicopters to other kids, and I was very upset that no one wanted to buy my helicopters. But the helicopters were leaves that fell from a tree like a helicopter, so I was really trying to sell them leaves! That was me in primary school, and a little bit of that carried into high school. I was always really interested in business, reading about it and learning about it. I suppose I saw myself heading in that direction, specifically, I was really interested in property development and large scale commercial and residential projects. I ended up studying construction management to go deeper into that world. None of that is social enterprise related, but in that journey, I met a lot of people and read a lot of books about money. I didn't know everything, but I certainly knew there was a lot to be made and a lot of it in circulation. At 19 years old I had a series of moments, but one in particular that really triggered this journey with Thankyou. I was watching some videos of kids who didn't have access to clean water. What piqued my interest was statistics that talked about 900 million people not having access to clean water. I remember thinking, "I don't know about that, who comes up with these numbers?" It just seems so lofty and big. I clicked into it, and just for reference, at this point in my life I had sponsored a child through World Vision and I grew up in a family where my parents talked about that, and so I had reference of poverty and what it was.

Something happened to me when I watched stories of kids and really put myself in their shoes and wondered, "what if that was my story?" I encourage anyone to do this when watching anything, whether it's a documentary, a video or even just hearing a story.

It's great to hear it, but when you ask yourself ‘what if I was in that situation?’, something happens. For me, I started crying, and it was because I just thought I can't even imagine my sisters dying from waterborne disease, and it being from the water I had brought them. For me this was a genesis moment and there were many more throughout the Thankyou journey, but I think what I found most uncomfortable was hearing those statistics in the context of my frame of mind, which is that there was a lot of money in the world and a lot of money to be made. At Thankyou now, we would frame it as we live in one world with two extremes. You have extreme poverty where there are 736 million people living in it, and you have extreme consumerism. We spend $63 trillion a year on stuff, and for me I think how does that even happen? How do you have one world with two extremes? In 2008 we had an idea to bridge those extremes by using consumer products and taking those mass purchases and using them to help right a wrong that shouldn't exist.

Thankyou co-founders Daniel and Justine Flynn, sharing a bonfire with locals and One Heart Executive Director, Surya Bhatta in Nepal. Image captured by Kim Landy.

Tell us a little bit more about the social enterprise Thankyou and how it's operating now? What shifts have you observed in the social enterprise landscape since beginning your journey 14 years ago?

It’s really interesting to hear your reflection around Thankyou's success, we've been in these 14 years now and the feeling I have is it's just the beginning and also, we have so far to go. Day to day, you're just faced with a lot of challenges.

I think the encouraging news is the landscape has shifted. Social enterprise is becoming more known which is good. I think in general, business is acknowledging purpose matters, in fact, if we don't have our purpose figured out, and we're not starting to engage thoughtfully and deeply in this space, we are going to lose our employees and consumers.

I think broadly business is asking what is the impact we're making and is it positive? That's the good news. But I think the little challenge is that now everyone's talking about social good. That's not bad, but I think the best way to process this is for us to use an analogy of whether an organisation's purpose and social good is a 'paint' that they're putting on the outside, or is it the 'fuel' that is driving them on the inside? It's sometimes hard to tell, and time is a great test amongst maybe a few other things. I think for us at Thankyou, whilst a consumer may hear about our purpose, it is less for us about the paint or the marketing, it's the fuel that drives us. We are driven at Thankyou to think about systems change, and this whole idea started with a consumer system and extreme poverty. We've spent years trying to figure out how to re-engineer or hack the system to create impact at scale. We've raised $17 million for our impact partners around the world from the sale of Thankyou products. That is good news, I'll tell you though we all thought there'd be a lot more zeros after that number in year three! That's partly because we were still young and naive about how hard it was what we were attempting, but I think that drives us as well, the fact of if we get this right, the scale of impact will increase.

Thankyou has transformed their giving model and have really started to instil trust in different impact organisations. From what I understand, your belief is that by giving in an unrestricted way, organisations will be able to amplify their impact. Can you tell us a bit more about this funding model you're using and the reasons you changed your approach?

It's worth saying first up that this is a really complicated topic and we've done our best to simplify it. At its heart, I think everyone in this space wants to do good, so that's the good news. There may be anomalies to that, but generally speaking, everyone wants to do good. Particularly if you're donating money, you're wanting to do good. Now, what we have learnt over the journey is some of the good people want to do has unintended consequences, and there's an interesting study that came out by a group called Open Road Alliance. I found it really confronting when I read it, it talked about issues that charities and NGOs face. Now, in my head it was things like theft and corruption, but in their study that only accounted for 4% of the issues that charities and NGOs face. In the sector we're in, 46% of the issues that our organisation face comes from donors. I couldn't believe it, but myself and the other co-founders Justine and Jarryd sat back and started realising we tick a lot of those boxes. If you're sitting here thinking, "what do you mean, the donor is the issue," there are some really interesting things that happen when people donate. There are different expectations. At a consumer level, often its people don't want too many admin fees or only want money to go directly to the field. We have these ideas in our mind, but it turns out that can be pretty damaging. I'll give you an example. Take medicine for example. Let's say Tom you need heart surgery and I'm generously going to pay for it. Now, I'm not in a position to do it, but let's say I could fund it. It would be weird for me to tell the surgeon, “here's how I want the heart surgery done because it's my money.” That is not how we approach medicine, but a lot of philanthropy is approached that was. I think the big call out here is if we look in business, business has scale. We have organisations around the world from Tesla to Amazon who are creating incredible innovation on an incredible scale.

But to do that, you have to fail, you have to innovate, you have to take risks. Move to the non-profit sector, there's a lot of risk aversion, people are afraid to fail.

If Jeff Bezos gets up and says, "we lost a hundred million dollars trying to launch a phone, but we learned some lessons and we're moving forward." That is celebrated in the for-profit world. You stand up as a charity and say, "we lost a hundred million dollars trying an idea, we're moving forward,” that's the end. But actually, innovation needs failure, flexibility and freedom. As a funder, the way Thankyou is giving is in a way that we would call unrestricted, and so what we would say is we do a lot of due diligence on who is the organisation we're backing and what is their vision. We then hear from them what is their plan? Then we send that money, and we don't tell them how to spend it. That's their job. They've got to figure out how to spend it and what risks to take. Then, we go on that journey with them. It is about trust, accountability and ultimately achieving impact.

Back in 2020, Thankyou made a considerable change to their model by stopping supplying bottled water, which ultimately was because there was critique about the potential for that model to harm the environment. In observing this shift, it created significant pressure within your organisation, so I'm really keen to hear your reflections, key learnings and how you ultimately turned that into an opportunity to deepen your impact?

That was a big one for our genesis product which was bottled water. I think like most things at Thankyou, we were optimistic by starting with bottled water. We always said it was a silly product, but we thought it was quite confronting to us as a society how much we value water. In 2008 we spent $50 billion on bottled water globally, a statistic I read about a week ago. That's now at $350 billion. It's huge considering everyone says they don't do it anymore, so we've got this growing issue. We started there and then assumed there'll be sustainable ways to do it. Through biodegradability we thought it'll be great! But actually, as time went on, market share grew and our profits grew, the sustainability story other than greenwashing and every solution ended up having more unintended consequences. You have to argue if we do that, it sounds good, but ultimately, it's not better for people.

What are we, marketers, or are we here to create real change? We debated for way too long and made the announcement in 2020. I think we made the decision earlier than that, but we really should have moved even quicker and dropped it. In part we held on because we were working on a future plan, which we're still working on. It's exciting, but it looks nothing like the past.

Thankyou co-founders Daniel and Justine Flynn, in Nepal. Image captured by Kim Landy.

The message in my reflection is sometimes to walk into the future you literally have to let go of the past. We left millions of dollars of revenue on the table that year, and retailers were confused. We said it just doesn't feel right for us as a brand and where we're heading.

Do we still sell plastic bottles in our hand wash? We do, we're working on solutions, and we are looking forward to announcing them. It is a journey, and I think for us it's the courage to take the big steps and at the same time be responsible. Sustainability is a journey and we're on one alongside the world.

In your path to growing Thankyou, what has it revealed about the gaps that exist to better support social entrepreneurs when it comes to finance?

I think you've got to be careful. This is hard because so much of it is a generalisation. There's nuance and there are always exceptions to the rule. But I think with the term impact investing, some days it just feels like the new flavour of the month. What people are really saying is they want the exact same return they usually get, or maybe they’re okay with a short lapse in that profit, but they want the same return and want it to sound even better.

I think true impact investment involves walking away from existing expectations on commercial return. The commercial returns that exist in part explain why the world exists the way it exists.

I think there's a real challenge in that, and so I take my hat off and have full respect for those in philanthropy and in social investing who are actually saying, "we're going to use capital for social change at all costs, and if there is a commercial benefit in time that's great, but that is a secondary wing."

A lot of people use the right language, but I think when push comes to shove, money particularly for early-stage social ventures is hard to come by. But that's not all bad. I would say to anyone out there starting a social enterprise, at Thankyou we've always not had enough money or investment for our vision or the things we're trying to achieve. I'm not talking about years away; I'm talking about enough throughout our lifetime. It always feels that way, but that actually keeps us very lean and hungry for innovation. Sometimes Thankyou gets credit for really innovative moves, but a bunch of them came from having no options, and so we had to! We had to take giant leaps with very small budgets that could ultimately deliver a huge change in what we did. I am a big believer in that fine line between getting funding and also being the lean, agile and innovative you need to be.

What advice would you give to other purpose-led entrepreneurs who are ultimately seeking to scale their social enterprise, deepen their impact and perhaps look at something like Thankyou and that similar level of scale?

My first reflection is if you're in that boat and you're finding it hard, I agree with you. I wish I could tell you it gets easier. But the problems do change. It's very easy to have a grass is greener approach of thinking Thankyou or another organisation must have it sorted and life is beautiful.

The problems change, and so I think actually as an individual, a leader or a team, it's about becoming really good problem solvers.

This is because your problems change at the scale of them, but it's really about honing that discipline, because if you have that, nothing is the limit. Things may take time and many of our projects have this beautiful 6-12 month runway or project length and they seem to always blow out to being about two years! I'm trying to beat those two years, but sometimes it's even longer.

I would say that change is messier than you want it to be, it takes longer than you want it to take, but there is a real art to refining your problem-solving skills at the street level.

It's great to have a big vision and to want to make a difference, and you do need to be good at articulating that and getting people to buy into it. Sometimes the game is won and lost in the street fight of the problem solving, and we certainly feel that now at Thankyou because the global supply chain is very disrupted. We are nimble on our feet and if we aren't, it doesn't matter how beautiful the idea of Thankyou is, it wouldn't be here. That just demonstrates how Thankyou took us 14 years to get to ten years of success. That's how it feels some days, it is a long road. But here is a secret, and it's not really a secret because it came from a great book! This has really helped us. In this particular book, there were these two pages and on the pages were two rules.

Rule one, make great products, rule two, never break rule one, and there's an asterix on rule two that says ‘never use a good cause to sell an average product.’ That's the secret to social enterprise. I genuinely think the purpose drives you. Don't use that purpose to try and sell your product.

Literally think about how we make the best product, because the mission we're on deserves it. Yes, the narrative of your purpose is a part of it. But those two rules have been a big part of our journey.

What initiatives, projects or social enterprises do you believe are creating positive social change?

In this space, I think hats off to Simon and the team at Who Gives A Crap. It is awesome, and there are so many I would say for-profit organisations popping up around the world trying to copy and mimic Who Gives A Crap. I definitely look on at their work and think it is awesome and challenging. Our models are slightly different, but the ultimate mission is absolutely the same, so shout out to them. I think it's interesting and controversial (and maybe this diverges from your question a little bit and links instead to the last one), but I have for years tracked the Tesla journey and think there is something in this that is so critical for social business. Whilst I'm not saying Elon Musk or Tesla are a social enterprise, I think they have really looked at this challenge we face at a huge level around the impact of the automobile industry and fossil fuel. But they're not selling a car that's got written all over it "buy this, it will save the world.” It's a beautifully designed, deeply thought through innovative supply chain, and an incredibly boundary pushing product. But actually, the social change that will come from that and the technology is incredible, so I look at that and think it's awesome. We need more examples on that level, and that's hard to get.

What books, resources, or blogs would you recommend to our listeners that will help inspire them to create the change that they want to see?

That particular book is a good one actually, it's called Do Purpose: Why Brands With A Purpose Do Better And Matter More. If you are not a huge reader, you'll love this book, it's mainly a picture book. It's really well designed, you'll get through it very quickly, but at the same time you may spend a whole life unpacking the wisdom dropped on each page. It is very deep and thoughtful stuff. That's where the two rules came from. I am a huge follower of Seth Godin's work, I think he has nineteen best sellers, but the book that has stood out to me is Purple Cow. If you look at Thankyou some of the big step changes, we've made you'll see linking to that book. Also, I loved his book Tribes, that's been really fundamental to our journey. The Icarus Deception was another great book. His work does a lot of good, but I think what's really important is to remember you are marketers and storytellers, so actually that's where a lot of Seth's work is really vital for social enterprises.

Your story can't just be, "and here is the change we want to make, here's the need and therefore you should buy our product." We've got to become really creative, in fact I think we have to out-market and out story tell the brands we compete with who are just in it purely to make money.

They're willing to invest big money in their marketing and storytelling. I think it is really important that people read up about how they give or the impact they make. I think there is a lot of research around donor dysfunction and thoughtful giving, and a lot of the work that B-Corp is doing is fantastic. They're putting out a heap of great material which is really important, because it's one thing to say you're going to do good, but it turns out that is really hard to do! I would say we've put out a bit of stuff on this recently, so there is a lot of material and I think it's really important to go deep on that.