Doing Well by Doing Good
Jeremy Hockenstein, SM '99's data entry company in Cambodia hires Phnom Penh's poor and offers them the chance of a better life.
Elizabeth Durant archive page
Last September, 10 women at the Cambodian Women's Crisis Shelter in Phnom Penh began a transformation that had previously been unthinkable. They came to the shelter to escape domestic abuse or prostitution and to rebuild their lives, but since they had few skills and little education, their chances of supporting themselves were slim. Fortunately, the shelter was partnered with Digital Divide Data, also based in Phnom Penh. The company hires Cambodia's poor and disabled to provide data entry services to universities, nonprofits, and corporate clients in the U.S. and Canada. Typically, its employees already have basic English and computer skills; these 10 women had neither. But that didn't stop social entrepreneur Jeremy Hockenstein, SM '99, the company's founder, from taking a chance on them. Within months, the women progressed from learning the ABCs on a chalkboard to typing 30 words per minute in English to achieving full employee status. Now they earn four times the national-average salary and have a lifeline to their future through the educational services the company continues to offer.
For Hockenstein, a soft-spoken 32-year-old from Montral, Qubec, launching the company fulfilled a long-held desire. "I've always felt like I was in a struggle to find work that was meaningful and challenging. I feel like my work has been a path to balance both those things," he explains.
The idea came to him during a consulting trip to Hong Kong in November 2000. On a whim, Hockenstein spent a weekend visiting the ancient Angkor temples in northwestern Cambodia. "While the temples were beautiful, I was struck by the people I met, and how there were Internet cafs on almost every corner. People really had the sense that computers and English were the key to their future," he says. It was an encouraging sign from a people whose past is marred by chronic political turmoil. From 1975 to 1979 the Khmer Rouge regime claimed 1.7 million lives and dismantled the country's political, legal, economic, and social infrastructure. Civil war and political infighting continued until 1998, when a coalition government took hold.
Now, 36 percent of Cambodians live below the poverty line, and only 32 percent are literate. Hockenstein-whose mother was born in a Holocaust concentration camp-was stirred by a desire to help a culture devastated by genocide, despite the obstacles. He began drawing on his strategic-consulting experience, including several years at the management consulting firm McKinsey, and recruited a few friends with business, nonprofit, and social-work backgrounds to join him. They spent February 2001 in Phnom Penh, researching their options, and discovered that plenty of Cambodians had basic English and computer skills, thanks to training provided by local nonprofits. But there were virtually no jobs.
The friends knew that a number of Western companies were already outsourcing data entry work to countries, such as India, with cheaper labor forces. They began scheming about how to attract similar investment to a country with limited infrastructure and less skilled workers. Moreover, they envisioned a data entry company that would provide not only jobs but educational programs that would offer employees opportunities for career advancement.
While his friends began recruiting and training Cambodian managers and locating a software vendor, Hockenstein returned to the United States to raise matching funds for the $25,000 his group had contributed itself-and to drum up business. He secured a $25,000 grant from the California-based Global Catalyst Foundation and got a $50,000 contract to digitize archived editions of the Harvard Crimson, Harvard's student newspaper.
Fortunately, Hockenstein and friends did not encounter any local bureaucratic roadblocks in Cambodia. The government paid little attention to them, Hockenstein says, since it's corrupt, and the concept of the company was alien to it. The biggest challenge was adjusting to the slower pace and inefficient systems in Cambodia. A trip to the post office can take hours, for example. "If you get one thing done in the morning, and one thing in the afternoon, you're having a good day," he chuckles.
By that measure, the friends accomplished a lot in a short time. They rented office space, purchased computers, hired staff, and opened for business in July 2001. Ironically, their company, which evokes a promising future, is located just a few blocks from Tuol Sleng prison, a notorious Khmer Rouge torture chamber where nearly 14,000 Cambodian men and women died.
Digital Divide Data now has 90 young Cambodian staff and managers. About half are poor, orphaned, or disabled from polio, "moto" (motorcycle) accidents, or land mine explosions. They earn about $100 a month, a handsome sum in a country where the average annual income is $290. Since they work six-hour shifts (half of what Cambodians in garment manufacturing and other industries clock), employees can use the extra time to continue their education. The company provides health care, English instruction, and educational scholarships, funded by U.S. donors.
"We've always seen this as a means to better futures for people," says Hockenstein. "Compared to the alternatives, it's clean, it's healthy, it's not back-breaking. But still, we measure ourselves on people going on to other jobs." Of the 105 employees hired since the company's inception, 15 have moved on to jobs in teaching, translation services, or business.
Michael Chertok, former managing director of and now an advisor to the Global Catalyst Foundation, which grants $1 million to 20 to 25 projects annually, admires Hockenstein's vision, drive, and "infectious enthusiasm." Digital Divide Data uses basic technology to meet a compelling social need, Chertok notes. It's also remarkable, he says, because the company became self-supporting-the ultimate ambition of all economic-development ventures-in less than a year. "In all the grant making we've done, this project has succeeded beyond our wildest expectations."
Hockenstein spends about half of his time generating business and working on plans to open new offices in rural Cambodia and Vien Tiane, Laos, later this year. Based in Cambridge, MA, he supports himself by consulting, mostly for nonprofits and foundations. He also collaborates with Richard Locke, PhD '89, Sloan professor of entrepreneurship and political science. Sloan students have gone to Cambodia for several weeks at a time to analyze the data entry company's business operations, and next year Hockenstein will help teach social entrepreneurship in Locke's class.
Since most Sloan grads pursue jobs in investment banking and management consulting, Hockenstein is a valuable role model, says Locke. "I am increasingly seeing among my students a number who are interested in doing entrepreneurial work that also has some sort of social relevance.[Jeremy's] one of the pioneers of showing that it can be done," he says.
In August, Hockenstein will return to the Angkor temples, this time with Digital Divide Data's entire staff and 20 Westerners, to mark the company's second anniversary. "It will be very satisfying to go back there with a diverse international groupknowing that within the context of a country with a rich history, we are working to help the next generation build better futures for themselves," he says. "And for over half of the group, it will be the first time they have ever traveled to a wonder of the world right in their own country, since it is too expensive."
Elizabeth Durant