Welcome to the first of many conversations with accomplished Georgetown alumni entrepreneurs. In a school known for politics and government, we are excited to highlight the incredible achievements and work of so many Hoyas around the world. Whether they have created successful household-name businesses or are using entrepreneurship to tackle pressing social issues, Georgetown entrepreneurs are expanding on what it means to be a Hoya. To kick things off, we were honored to speak with 2016 Georgetown Alumni Entrepreneur of the Year Awardee, Tom Raffa.
GEA: What did you study at Georgetown?
I didn’t go to Georgetown for this [entrepreneurship], but I ended up being an accounting major in the Business School. I actually came to Georgetown because I wanted to do social justice law. I had a bit of a run-in with the law when I was younger, and I was determined to change the juvenile justice system. Big dreams!
GEA: What was your favorite class or professor?
Not sure I remember that far back as to a specific class, but I think George Houston was one of the best and nicest professors I had. And over the course of my lifetime, we became close friends.
GEA: What was your fondest memory from your time on the Hilltop?
Good friends, all of which are still my dear friends today. There wasn’t much housing on campus when I went to Georgetown, so many of us lived off campus in various houses spread throughout the area. Each group house had a unique culture, so we could visit each other and be immersed in a different world. This also allowed us to expand more into the town of Georgetown and DC, and this meant expanding friendships to folks that were not Georgetown students – several of which moved into our group house.
GEA: Georgetown is known for politics, government and global affairs. How did you become interested in entrepreneurship?
I worked my way through school, so in my freshman year, I got a job in the town of Georgetown. The highest-paying jobs were accounting related. Having taken a semester of accounting with the then-famous George Houston, I boldly told a store owner I was an accountant. The store quickly grew from two in Georgetown to 31 stores throughout DC with one in Richmond and one in Philadelphia. It was called “Up Against the Wall.” You can believe I learned accounting very quickly. I figured I had better actually start studying accounting, hence my major.
The two owners always referred me to other stores in the town of Georgetown to do payroll for Clyde’s or close the cash registers and take inventory for a few bars. By the time I graduated, I was working with a dozen or so businesses, doing my part toward their success. This became my first official business. When I graduated, thinking I might get a scholarship from the law schools I had gotten into, I sold my business for a whopping $6,000. I guess it all started with the need to make tuition money.
GEA: Raffa Consulting started as an accounting and consulting firm for non-profits. Why did you focus on NPs specifically and how did you grow and scale into so many different sectors and services?
I thought I should cut my hair and get a reputable job, so when I did have money for law school (I still wanted to fix the justice system), I would have something solid on my resume. I went to work for PwC (then Coopers & Lybrand). I spent about nine years there doing work for mostly large, publicly-traded companies.
At one point, when a partnership was being offered, I began to re-evaluate my priorities. I felt that I did not want to just count earnings per share for companies each quarter. I thought there had to be something more important I could be doing. So I left, not knowing what I was going to do, but knowing I needed to stop the noise to figure it out. I didn’t believe that the sole metric for success should be financial performance. After months of working on my own with small companies who also just wanted to make more money each year, I figured it out and developed a new way to measure my success. I came up with the firm’s mission statement within eight months of the birth of my new company in 1984, and it still remains with us today… "To be a catalyst for positive and systemic change in our community." Since there were no companies I knew of that were doing much social good, I found in nonprofits the mission I could align with.
As we grew, we saw more needs in the sector that were not being satisfied by traditional business and consulting firms, so we continued to expand into many lines of business to fill these voids. And we continue to do so today (this year we started three new lines of business).
GEA: A few years ago you funded (and remain on the board of) Compass Partners, a Hoyas founded fellowship that provides incoming college freshman with training and education on how to start socially oriented businesses. What impresses you about Compass and where do you see it heading?
While I graduated from Georgetown in 1976, I never got too far from the campus (especially with the University as my client). I taught at Georgetown, helped to develop a mentor program in the business school, trained graduate students on nonprofit board governance to place them on local NP boards, etc. I worked hard to encourage the University to consider introducing another side of business into the curriculum, to use nonprofit management as a consideration for leading an enterprise, but it never stuck.
I was giving a keynote speech for Georgetown after a Case competition, talking about a better way to measure success through impact and not getting very far with the students from Harvard, Georgetown, BC, etc. But a student that was there as the entertainment as one of the Georgetown Chimes, heard me loud and clear. He came up later and asked if he could meet with me. I set up the meeting for the next day and Arthur Woods brought along his buddy, Neil Shah, to my office and within an hour we had their vision of the Compass Fellowship in motion. I gave them anything they needed to get it off the ground - money, office space, accounting and tax support, you name it. I saw it as a much better (and easier) way to introduce this social aspect of business to the University through a grassroots student movement… and I have been active in supporting it ever since.
I saw Compass - and still see it - as a movement with all students and all colleges. We can just put it out there, just like an open source software program, and let the great and caring minds of this new generation take it to levels I can’t foresee.
GEA: You are very active in the D.C. community and have founded or are involved in several startups in the city. What are you working on currently and what's in the works?
This could be a very long list, but one funny story is that one of the two owners of Up Against the Wall, who helped me financially to get through college, saw my name (which is the name of my company) on a building downtown. Chuck said, “That has got to be the Raffa I know,” and he came up and we reconnected after 35 + years like we had never parted. We began opening self-serve yogurt stores and now are working on Zombie Coffee and Donuts with a new store opening on the campus of the University of Georgia in March. The coffee is sourced from a rural area in El Salvador, and we are working with UGA to give them all the proceeds from our grand opening. We are going to get three small needs that UGA and its students have each month, and every time someone buys a coffee or a donut, they get to pick one of the three. At the end of the month, we will fund the cause with the most votes.
I am also helping a startup, Eislee Designs, that sources baby alpaca products from rural areas of Peru; creating a fund to invest in the enterprises of returning citizens – we train them, support their start-up and continue business operations as the dollar investments are made; helping two Georgetown students with cold press juice made from not so pretty fruits and vegetables; and mentoring a project through Halcyon House that works to empower citizens in rural communities to make the effort for representation and positive change.
In my companies, we are starting a fund to support social impact ventures and have a new division that provides CSR services to mid size companies that want to have more impact with their community involvement and charitable giving.
GEA: What fellow Hoya entrepreneurs do you admire?
There are so many students that I know will succeed because they are tenacious and great leaders.
These new leaders will learn to measure their success not solely in terms of their earning per share but more for their impact on their communities or even the world. The great ones will find a way to have a sustainable business that is based in fixing social ills. I know two women that are selling feminine hygiene products in northeast Africa at a profit, sourcing the products in Africa rather than looking for free handouts from US Corporations. They solve a social issue at a small profit while providing local jobs to their suppliers. And they can continue to do so without reliance on some inconsistent funding or in-kind support from a corporation that may need to cut back its philanthropic “expenditures” to keep the EPS up.
This is true social change within a business enterprise and may eventually even succeed the model of giving away a pair of shoes for every pair you sell.
GEA: When you look now at the Georgetown ecosystem, in what areas is Georgetown succeeding and where should they focus more?
I want Georgetown to have a GOOD index. I don’t really care that Georgetown may have the most graduates on Wall Street than any other University in the world. I want to be able to say that Georgetown students are making the world a better place.
To do this, we need to change the culture, the definition of success. We need to reward students not just for doing good on exams or the paper they write, but for doing good in the community. Give them grades for finance and give them grades for helping to straighten out the finances of a nonprofit.
You provide four years of holding such metrics out to students as ones to attain to be truly successful, and you will create a generation of social innovators -- leaders who no longer continue to measure their corporate and personal success with simply their short-term financial performance but see the broader influence that determines long-term, sustainable success.
In our striving for profitability, we often discount the well-being of our employees; we might misread the needs of our customers; we can negotiate so hard with our suppliers so as to threaten their viability; and perhaps, most importantly, we may simply ignore the needs of the community in which we operate. The competitiveness of our business and the health of our communities are interconnected, so I believe that by advancing the economic and social condition in the communities in which we live and work, we will advance our businesses. In the true Jesuit tradition, Georgetown students will not just be better business people; they will be better human beings!