We have found a new home! Kindly visit this link in our new website here: https://www.denver-frederick.com/2016/10/17/jim-fruchterman-founder-and-ceo-of-benetech-joins-denver-frederick/
The following is a conversation between Jim Fruchterman, the CEO of Benetech and Denver Frederick, host of The Business of Giving on AM 970 The Answer in New York City. This transcript has been lightly edited for clarity.
Denver: In the late 1990s, I remember quite vividly speaking to my colleagues in the nonprofit sector about the philanthropic potential out in Silicon Valley– from those making billions of dollars in what we now know as the internet bubble. And the response was pretty universal. “Everybody out there is so busy making money that no one is thinking about social good or giving any of it away.” But that “everybody” did not include my next guest who was there, and was always thinking about how technology could be used to best serve humanity… long before it became fashionable or was considered the right thing to do. He is Jim Fruchterman; the founder and CEO of Benetech. Good evening, Jim, and welcome to The Business of Giving.
Jim: Delighted to be here, Denver.
Denver: So many great enterprises start with the flash of insight. Yours occurred in the 1970s when you were a junior at Caltech, doing quite well in the coursework, but a little frustrated that you weren’t coming up with any original ideas. But then one day, in Modern Optics class, a light bulb went on. What was the idea that you came up with, Jim?
Jim: So, we were learning about optical pattern recognition– the idea of having a machine actually recognize something in the real world. And since it was the 1970s, and all the jobs were in the defense establishment, the example the professor used was “How to make a smart missile.” It would have a camera in the nose, and it would have in its memory a representation of a tank. The idea was: if you fired this missile, it would look around with its camera until it spotted a tank, zoom in, and blow it up–Boom! And I thought: “Gee, what if there’s a more socially beneficial application of this technology?” And then I had my one good idea in college, which was: “Hey, instead of recognizing tanks in the battlefield, what if you could recognize letters and words, and read to blind people!”
Denver: Oh, wow!
Jim: So I kind of figured it out; I sketched out a design. I ran to my professor next day. He said: “Well, Jim, it has been invented, and the National Security Agency uses it to process Soviet faxes… recognizes that, routes it to a human to read.” And I thought: “Wow, okay! So it costs millions of dollars each…not very practical.”. But it was that one idea that I kept with me as I continued with my career.
Denver: How did you pursue it?
Jim: Well, pretty much, my professor told me it wasn’t going to happen. And so I went on, went to Stanford, started a PhD program, started an entrepreneurship talk series. The second speaker was the President of a private rocket company, and it was too good an opportunity to pass up.
Denver: And you actually had the right answer to who his favorite science fiction writer was, right?
Jim: Yeah! And I didn’t even know that was the interview question. But he’d come and given a talk; we had him over to a cafeteria and fed him a sumptuous dinner, and he asked: “Who was my favorite science author?” And I said: “Paul Anderson.” Bingo! I was hired. And so, anyway, I took a leave from the PhD program and joined one of the first private rocket companies.
Denver: And the rocket blew up, and you moved on. You met a guy from HP who basically was able to take this idea pattern recognition and reading for the blind, and Lo and Behold! You started or became involved in a company that was going to build readable machines.
Jim: That’s right. His idea was to make a chip that could read anything, and I went: “Hey, that’s my one good idea from college! You can help blind people with that!” Now, we didn’t sell it to the venture capitalist though based on the blindness application. We sold it on routing the mail and scanning in forms for insurance companies. But that idea of helping blind people was still in the back of my mind throughout years of getting this company off the ground.
Denver: And you got your venture capital, about $25 million worth, if I recall. But this idea didn’t really have much of a market potential for your investors. So what you did, if I understand correctly, is you spun it off into your own nonprofit organization?
Jim: That’s right. We actually pitched it to our board to actually be a product for our company–a new product. And when they heard it was a $1 million/year marketplace, they vetoed it on the spot. And so when I said: “Well, what if I start a side nonprofit and not distract the team?” They said that was no problem. So we actually started… the joke was a deliberately nonprofit Silicon Valley company because, of course, we all had been working for accidentally nonprofit high tech companies.
The goal of Benetech is to develop tech solutions for communities in need…the kind of people that Silicon Valley would say: “We can’t make enough money off of human rights activists or disabled kids.
Denver: And so tell me how that company worked, what you did, and what you were able to do for people who were blind.
Jim: We went out there with the idea of making a reading machine for the blind. We thought we’d have volunteer engineers in every city helping people get it. Turned out, we talked to blind people who said: “No, we can’t get jobs.” So we ended up making blind people our dealers and so they sold the reading machines, and they made a living. We made enough to keep ourselves going. And it turned out that it was the only high tech company I have ever been associated with that exceeded its business plan. It was $5 million a year and slightly profitable within three years. But just a tiny bit of profit… because we weren’t in the business to make the money; we were in the business to keep it going.
Denver: And the price of the machine kept going down, but then the number of people who bought it kept going up… and you did this for about 10 years. And after about 10 years, you were a little tired of doing it, and wanted to broaden out some . So, is it right that you actually sold your nonprofit company?
Jim: That’s right. Some guy came and said: “I want to buy your reading machine for the blind business, and I told him to go away… I was running a nonprofit. He came back three months later and said: “Jim, tell me your aspirations.” I said “Oh!” I’m a nerd… I didn’t recognize that that was a negotiating ploy. So I told him! I said: “I’ve got this idea for helping human rights groups, and I want to have other things for people with disabilities…” And so he said: “How about I pay you $5 million…” Not me personally, my nonprofit. …”and you and the engineers can stay in the nonprofit… and you can go off and basically do anything!” And so we did that. It was about this same time, the dot-com bubble popped. So, right as the bubble popped, we had $5 million…not for me personally… but it was a budget to do new things. And that was a blast!
Denver: I bet it was. And this new nonprofit you started is Benetech.
Jim: That’s right. The nonprofit I run today.
Denver: Tell me exactly what the mission and goals of Benetech are.
Jim: The goal of Benetech is to develop tech solutions for communities in need…the kind of people that Silicon Valley would say: “We can’t make enough money off of human rights activists or disabled kids.” And so we build products, and our goal is that they be sustainable. But again, we’re a charity; we’re not trying to make money; we’re just trying to break even. We keep spinning up new tech projects. When we started Benetech, we probably looked at… I’d say, 50 ideas, invested in 15 different ideas, and then 4 turned into world-changing social enterprises. That’s our goal– to keep doing that. Be a factory for new tech applications that helps society, helps the other 95%.
It’s all about using information to advance the cause of human rights.
Denver: Well, let’s talk about one or two of those. One of them is around human rights, and it was inspired by something that came out about El Salvador in the 1990s… about an occurrence that took place in the 1980s. Tell us what that was, and how it informed you to begin to pursue human rights.
Jim: So, there was a New Yorker article about the El Mozote massacre. It turned out that this massacre happened in the early 80s, hit the front page of the New York Times. The US government, the Salvadoran government said it didn’t happen. The reporter was fired. Then 10 years later, a forensics team– after the civil war was settled– went, excavated, and found more than 500 bodies in this location.
I went brainstorming with one of my long-term buddies, saying, “How can we defend peasants from being murdered en masse?” And we’re nerds; we said: “Gee, defensive force fields, if we could invent them. Oh, nuclear power plant per village, not very practical.” So we came away from that with the idea that information is the only asset that human rights groups have beyond their activists, right? How could we make sure that they wouldn’t lose the information, and they’d used it for advocacy. And when we have a lot of stories, that’s data! We can actually make a case for patterns; we can help convict former dictators. It’s all about using information to advance the cause of human rights.
Denver: So, essentially what you did is… you built some software. What’s it called, “Martus?”
Jim: Yeah. The magic technology is cryptography, right? To scramble it so that repressive governments can’t read who’s testifying against a corrupt colonel… or whatever it might be. So the idea was encrypt it, scramble it, so it can’t be read, back it up in the cloud (as it’s now called) so it doesn’t get lost, and then use it for current advocacy.
“Let me tell you a story… about someone…” and more powerful data analysis. “Here’s one person’s story, but we have 10,000 women just like Maria.” So you can’t attack Maria as being not representative of this pervasive problem of gender-based violence, or whatever it might be.
Denver: So, if information and truth are the only weapons that these populations have… until you came along, most of this information was really being lost. People would come; you’d write it down; you stick it into the computer. But probably a number of years later, it was all… someplace… but not in front of you.
Jim: And we did market research, right? We actually figured out what they needed. Yeah, we found out that… our estimate was 95% of the stories that went into a human rights group weren’t there five years later. And they never got used for advocacy, for justice. Sometimes it was because the government shut them down; sometimes it’s because their office is burned; their computers got stolen. But a lot of times, they ran out of money. There was one group in Sri Lanka where five years of files were eaten by termites, and that just annoyed me. I know about scanning documents! We could do something about that! So,let’s make sure it’s not lost, and every story should be a tool for advocacy, for justice.
“The idea is that we’re making David more powerful in his battle… or her battle, with Goliath.”
Denver: One of the places you’ve done an awful lot of work over the past decade or so has been Burma. Tell us what you’ve done there.
Jim: A dozen Burmese groups got together about 10 years ago and said: “We all represent different segments of the Burmese community: women’s groups, different minority groups, different political groups. But they all agreed that the military government in Burma was committing human rights violations. So, over a lengthy period of time, these group members collected more than 30,000 stories.
After a while, they trusted us more. We found an analyst and said: “What are the most common human rights abuses going on in Burma?” Out of these 30,000 stories, the most common ones were torture, land confiscation and forced labor. And so now, there’s a new government in Burma; the human rights movement now has the stories in the last 10 years; they’ve got the patterns of abuses and now they could be advocating: How do we reform the police forces so that they don’t abuse ethnic minorities? A problem in Burma, and maybe a few other countries…
Denver: Another place you’ve done an awful lot of work in human rights has been in Africa, particularly in the LGBT community. Tell us what you’ve been doing in Uganda.
Jim: So we actually are helping the LGBT movement in Africa, Uganda being one of the countries. Document that human rights abuses are going on. So they’re now starting to issue national reports of how police forces beat up lesbian and gay people. And now they’re actually using that to advocate for change. Sometimes they make change in their own country; sometimes they have to go through a UN process. But the idea is that we’re making David more powerful in his battle… or her battle, with Goliath.
Denver: Yeah. And in relation to these stories, in this particular case, you’re also keeping offsite membership lists, correct?
Jim: We didn’t expect that. We went there to do human rights documentation, but then we heard from people that they were actually backing up their membership lists. As a matter of fact, we had a phone call last year…we’re checking in with one of our groups… and they said: “Oh, we’re in the backyard!”
“What are you doing?”
“We’re burning all of our documents!”
They had actually scanned and backed up all their documents into our secure cloud, and they were burning them because they were expecting a police raid. They didn’t want to have any records on hand in case the police found them.
Denver: Very smart. Are there any places in the world where your software– which is open source, and is free– is being used in human rights abuse cases, and is not really getting the kind of coverage or attention that it really warrants? Instances where it is under the radar right now?
Jim: We are hearing about a lot of human rights abuses against people with disabilities. Sexual violence against women with disabilities, people in prison without any chance of getting out…
Denver: This across the world or in any particular places?
Jim: We think it’s across the world, but we’re talking to groups in Latin America, Asia, Africa. I mean, there are people in Africa where you’re chained to a log for a year, right? And that’s not very human rights respecting!