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Room To Read Turns Silicon Valley Riches Into Global Libraries, Schools

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It's no secret that the leaders of Silicon Valley have barrels of cash. What's new to me is those denizens of the Silicon Valley Start-up Common (SVSC) give their wealth to causes that generate what they perceive as high social value in return. In that pursuit, the SVSC is putting some of its cash into Room to Read -- it builds libraries and schools for the world's poor.

The idea of the Common originated near an English village in a field where everyone brought their animals to graze.

If the community did not over-consume the grass and kept it fertilized and fresh, then it was a useful resource for generations. If a few farmers let their animals eat too much, the whole thing died and the community fell apart. That unpleasant outcome was dubbed the Tragedy of the Commons.

In Silicon Valley, there is a start-up common. Instead of grass, it consists of various ingredients – capital and skills like product development, managing teams, sales and marketing — needed for start-ups to get off the ground and grow. First-time entrepreneurs network to tap those ingredients and if they are successful, then they give back to the common to benefit the next generation of start-ups.

Room to Read has an interesting story and a great relationship with the SVSC. As he explained in an October 12 interview, founder John Wood, left Microsoft (MSFT) at the peak of its economic power to start Room to Read. He was from Colorado and earned an undergraduate degree in finance at University of Colorado.

As Wood explained, "My father always told me 'If you want to run a business you have to know how to keep score and if you don’t’ know how to keep score they can pull the wool over your eyes.'"

After getting an MBA from Northwestern, Wood joined Microsoft in 1991 when it had 5,000 employees and left in November 1999 to start Room to Read. He fashioned himself as a modern-day Andrew Carnegie who used his fortune to build libraries. Room to Read would take that idea to poor people around the world.

As Wood explained, "I just felt there was a real untapped opportunity out there but nobody had ever done for the developing world what Andrew Carnegie did for America. Carnegie made one decision -- and it was widely regarded as one of the greatest philanthropic decisions of all time -- to open a network of public libraries to reverse the notion that if you were poor you can get access to books."

In Wood's global travels to "post-apartheid South Africa or Cambodia I’d meet kids who didn’t have books. I’d meet teachers who were trying to teach who didn’t have books to teach with and I’d see schools that had empty libraries and I thought 'Why-the-hell has nobody done for the developing world what Carnegie did for America?'"

Wood has made considerable progess with early help from the SVSC. As he said, "Our earliest seed funding is a kind of a murderer’s row of people in Silicon Valley who were very generous to help me get Room to Read off the ground -- including Don Valentine, the founder of Sequoia Capital, Don Listwin who was a senior executive at Cisco (CSCO), Marc Andreessen, Bill Draper and Robin Richards from Draper Richards and eBay (EBAY) co-founder, Jeff Skoll."

12 years later that vision is a reality. According to Wood, "We’ve opened 1,600 schools and13,500 libraries. No organization has ever done that much that quickly in this space and a lot of the reason we were able to do it is because Silicon Valley got behind us with money, people took board seats, and advice. Even though I am living in New York, we are very much a product of that Silicon Valley Startup mentality."

Room to Read's appeal to the SVSC is its innovative business model that turns a donation of $30,000 to $50,000 into a library or school in which donors can take pride. Wood developed this by borrowing an idea from "the business world that low prices drive volume -- we’ve taken the same approach to this that Jet Blue or Southwest Airlines (LUV) would take, which is low prices drive volume."

Wood gets local communities to contribute much of the cost to build and operate a library or school. As he explained, "What I mean by that is we save money in a really unique way, for example land, we build a school or a library the land has to be donated by the local community. We don’t buy land."

Communities that Room to Read works with must provide  "sweat equity." That is, according to Wood, "They must donate labor to the projects, clearing the ground, digging the foundation, carrying the building supplies from the roadside up to the mountain village, breaking the foundation, digging, mixing the cement, building the bookshelves. And the government is required to work with us to provide the teachers and the librarians and then pay their salaries."

Why has the SVSC been so generous to Room to Read? Wood believes it has to do with Karmic justice. He said, "You can’t survive in Silicon Valley unless you’re well educated and I think people who are well educated realize that without education 'I’m not me.'"

Then Wood goes in for the ask: "I try to remind people that through Room to Read they have a chance to pay that Karma back to those of us who were born in the right place at the right time we have a moral and  Karmic duty to give that same opportunity to the kids who are being told they were born in the wrong place at the wrong time."

Prior to meeting Valentine, Wood found out about his daughter's involvement with education. As he recounted, he told Valentine, "Your daughter Hilary’s really well educated, what would her life be like if she hadn’t been educated. Well over 200 million girls from the developing world don’t go to school and we’re changing that. And all it takes is $250 per girl per year to put a girl in school and keep her in school so it really is it is change on the cheap it’s not an expensive proposition. And Don Valentine said '$250 per girl per year. He said that’s the biggest no brainer I’ve ever heard of .'"

Wood is a great salesman who invented a product in which he firmly believes -- and so does the SVSC.