Donors Bob and Dottie King believe the GSB can help the extremely poor in developing economies by working with managers of existing organizations on expansion and with new entrepreneurs.

by Joan O'C. Hamilton

Bob, MBA '60, and Dottie King have shared their investment wealth with American youth organizations and Stanford fellowship students. Now the couple is providing $150 million to the GSB for business education and research approaches to addressing extreme poverty in developing countries.

When Bob King, MBA '60, first opened his own investment business at 3000 Sand Hill Road in the early 1970s, he had some high-energy neighbors. Fairchild Semiconductor founder Eugene Kleiner was downstairs launching what would become the legendary venture capital firm Kleiner, Perkins, Caufield & Byers. Larry Ellison and a team of four moved into the next building over with a little software company called Oracle Corp. Intel cofounder Bob Noyce was a client. All around him, ideas were percolating and engineers were rolling up their sleeves to invent the future.

And when King hopped in his car for the short drive down the hill to the quiet, tree-lined neighborhood near Stanford where he and wife Dottie have lived for 47 years, the energy hardly ebbed. In addition to Dottie and their three children, there was almost always a Stanford student from overseas living in their guest cottage. Dottie, the daughter of a Madison, Wis., high school coach, had such fond memories of the Chinese exchange student her family had hosted in the 1940s, she wanted her children to have the same perspective-broadening experience. Through the years the Kings would host more than 50 different students. Says Dottie, "We've been astounded to meet people who have come from such difficult circumstances — living with dirt floors, very poor — and yet here they are at Stanford getting a PHD or an MD."

The combination of experiencing firsthand the early days of Silicon Valley and getting unique global perspectives from their beloved student houseguests would prove nothing short of magical in the minds, hands, and hearts of the Kings. In fact, it would come to inspire one of the largest single gifts ever given to Stanford University. On Nov. 4, 2011, the Stanford Graduate School of Business announced that, thanks to a $150 million gift from the Kings, it was establishing the Stanford Institute for Innovation in Developing Economies. The institute's aim is to stimulate, develop, and disseminate research and innovations that enable entrepreneurs, managers, and leaders to alleviate poverty in developing economies.

The institute, or SEED as it will be known (a play on the initials SIIDE and also on the venture capital notion of early-stage or "seed" funding for new ideas), will be organized in the business school and directed by supply chain expert Professor Hau Lee. The business school is at the heart of the institute, but the Kings are excited about the notion of bringing together the best minds all across campus to the challenge of attacking what they consider one of the world's most pressing needs: raising the standard of living for the more than 1 billion people in the world existing in what the World Bank refers to as "extreme poverty," or living on $1.25 or less per day. "We believe that innovation and entrepreneurship are the engines of growth to lift people out of poverty," says Bob King. "And we believe Stanford's tradition of innovation, coupled with a forward-thinking global bias as well as its multidisciplinary resources, will make a real impact." Adds Stanford University President John L. Hennessy: "With tremendous foresight and compassion, the Kings have made a seminal gift that leverages Stanford's knowledge, resources, and human capital to make a real difference in the world for many years to come."

The Kings and the business school both see the gift as a way to make lasting, sustainable change in the lives of the world's poorest inhabitants, and if there is one subject that lights up Bob's and Dottie's faces, it's the excitement of making a difference. Although Dottie says with a laugh that they have deliberately flown "under the radar," the Kings have spent years pursuing a style of philanthropy that will see its greatest impact in SEED. "We're about results, and that means accountability," Bob explains. They have been active in many kinds of philanthropy, supporting increasingly popular microfinance projects in the developing world, including the Village Enterprise Fund and Kiva; they have supported organizations such as the Positive Coaching Alliance and Grassroots Soccer, which is using the prominence of soccer stars in the developing world to educate young people about the threat of HIV/AIDS.

They also have spent almost 15 years developing their own family's Thrive Foundation for Youth, which works with American youth organizations in developing tools to help coaches, teachers, ministers, and other important role models inspire and help young people achieve their potential. Their three children, Brad, Cynthia, and Jennifer, and their families have all been integral in that effort. "We took from the Thrive experience a mental model of how do you draw on really good research; we're convinced it can be done. With our wonderful reception from Stanford University [in the arena of global poverty] now we can do it more efficiently and with more purpose," says Bob.

The Kings met in 1957 when Dottie was visiting a relative and working a summer job in Maine. Bob, who grew up in Boston, spent vacation time there every summer. Newly graduated from Dartmouth, he was working in New York and Dottie says she "set the tender trap" of inviting him to join her to see Rosalind Russell on Broadway starring in Auntie Mame before heading back to Wisconsin. By the fall of 1958, they were married and on their way to Stanford, where Bob would get his MBA. Dottie supported the young couple by working in the office of GSB Dean Ernie Arbuckle. "I owe everything to her," Bob says, smiling as he recalls his student days in their apartment in what used to be called "Whiskey Gulch" because of the abundance of liquor stores. Today the posh Four Seasons Silicon Valley is that area's landmark.

After graduation, it was back to New York for a year while Bob worked at Shearson Hammill & Co. before he talked a senior partner into sending him back to San Francisco. In 1972, he launched his own investment firm, R. Eliot King & Associates, and in 1998 he started his venture firm Peninsula Capital.

Deep personal connections characterize the Kings' fondest memories, successes, and milestones. One of Bob's significant investment wins, for example, grew from a meeting arranged by one of the students they hosted in their home who would practically become a member of the family. Xiangmin Cui, Stanford PHD '97 in medicine, grew up in a rural Chinese village with no electricity or tap water. He first met the Kings at a dinner for international students in 1992 and would later spend a summer in their guest house.

"They are very humble people," Cui says. "But they have incredible hearts. And Bob is a great mentor. He always encouraged me to think big. He would say, 'Min, you are going to have an impact on the whole world.'" Cui works today as a venture capitalist in life science technology companies, but in the late 1990s, his friend and classmate from Peking University, Eric Xu, came to him with an idea for a Chinese-language search engine company developed with internet engineer Robin Li. Cui couldn't help directly, but introduced Xu to Bob King, and Peninsula Capital provided the first seed funding for what would become Baidu. Bob and Dottie were on hand on Wall Street in 2005 when Baidu made a dazzling debut on NASDAQ. The search engine giant now employs more than 10,000 people in China.

Says Bob King: "Entrepreneurship is the engine of economic growth historically in the world. If you're going to change lives it's not through a government taxing and spending program; it's through the creation of real jobs and the improvement of productivity."

Another King home-stay student, Andreata Muforo, MBA '09, who is from Zimbabwe, also has figured into their global aspirations. She went to Iowa's Grinnell College as an undergraduate, and then came to Stanford to get her MBA. While Muforo, one of eight children, was staying with the Kings, her mother died of AIDS. They became very close friends, with the Kings not only visiting Muforo in Tunisia, where she was working at the World Development Bank, but in April 2011 traveling to Kenya to be part of her wedding.

"Is Andreata going to make the world a better place? You bet she is," says Bob. As a student, Muforo led an MBA study trip to South Africa, and then brought trip participants to the King home for dinner. "We heard how those firsthand experiences compelled some of the MBAs to return for internships in Africa," says Dottie. "We saw the direct connection between the learning experience and the motivation to make change." In fact, the Kings previously funded a program at the business school to enable all MBA students to have an "international experience," including study trips, exchange programs, internships, and experiential activities.

"Today's students aspire to achieve a global impact that will change people's lives for the better with everything from businesses that create employment and income sources to creating access to better education, health care, and governance," says Garth Saloner, the Philip H. Knight Professor and Dean of the Stanford Graduate School of Business. "This initiative is an enormous opportunity for Stanford students, faculty, and on-the-ground entrepreneurs to collaborate on the design and incubation of new enterprises and solutions."

One of the school's programs that has attracted widespread attention and has been inspiring to the Kings is a course called Entrepreneurial Design for Extreme Affordability, offered with Stanford's Hasso Plattner Institute of Design. In collaboration with in-country organizations such as International Development Enterprises and Proximity Designs, Stanford students already have identified needs that sparked ventures such as D.light, a consumer products company that has created sturdy, solar-powered LED lamps that provide light and reduce the need for kerosene lanterns among people without access to reliable electricity. Another offshoot of this course is Embrace, a venture that created low-cost infant warmers for premature and low-birth-weight babies in the developing world.

Going forward, SEED will develop a face-to-face and online curriculum for in-country entrepreneurs, leaders, and managers to help grow and boost the performance of nascent or ongoing ventures. In general, SEED's work will span three pursuits: research, education, and applied on-the-ground work to support entrepreneurs and help growing enterprises.

The Kings' strong commitment to translating research into action fuels the first pursuit: Scholars will conduct multidisciplinary research in close cooperation with in-the-field managers that is focused on new and effective ways to both increase the impact of managed organizations and develop solutions to improve governance, education, and infrastructure. Secondly, it will educate Stanford students from around the world, as well as entrepreneurs, social entrepreneurs, managers, and leaders in developing economies, to enable them to relieve poverty through effective leadership and problem-solving. Finally, it has the goal of building capacity on the ground to support action by entrepreneurs, managers, and leaders to grow their organizations and spur innovation. All this developed as the Kings and their philanthropic consultant Kim Jonker, MBA '01, stressed their bias for action for SEED: "What gets me so excited," says Bob, as Dottie nods vigorously, "is that we're focused on 'on the ground.' It's not a think tank. This is change lives, create businesses, scale business, create real impact."

Hau Lee says one current example of how the product of combining all three elements is likely to be greater than the sum of its parts is the Mountain Hazelnut venture in Bhutan. The venture, founded by a Stanford graduate, aims to grow hazelnuts in the poor country of Bhutan, thereby giving jobs to tens of thousands of farmers. It's farming in an environmentally sustainable way, and the company pledges to give 25% of its profits back to the local communities. "One of our MBA students worked on this venture to figure out the business model and distribution logistics," Lee said. "The research project resulted in the student eventually joining the company to work full time. We have written a teaching case and used it in our MBA curriculum. Three Global Management Immersion Experience [GMIX] interns have spent parts of their summers in Bhutan. The project covers all three thrusts in an integrative way."

The Kings have made a $100 million gift to the business school to fund the institute. In addition, they have committed $50 million in matching funds to inspire other donors to fuel Stanford's commitment to alleviating poverty, bringing the total philanthropic investment to potentially $200 million.

The institute will draw from the business school's world-class MBA program and suite of courses in entrepreneurship, as well as research on supply chains, finance, funding, and other topics relevant to the needs of growing economies. Additional resources to support the institute's work come from the school's Center for Social Innovation, which includes the Public Management Program, the Center for Entrepreneurial Studies, and the Center for Global Business and the Economy. The school recently launched an evening Program in Innovation and Entrepreneurship and has welcomed the Stanford Program on Regions of Innovation and Entrepreneurship, which conducts research and holds conferences for entrepreneurs, investors, and government leaders about the elements that contribute to regions of rapid growth around the world. Going forward the institute expects to embrace resources, students, and faculty from across Stanford's six other world-class schools. There is already a tradition of cross-campus collaboration with approximately one in six MBA students currently enrolled in a joint or dual degree program involving another part of the university.

Besides being the overall faculty director, Hau Lee will head the institute's research effort. Jesper Sørensen, who teaches Poverty, Entrepreneurship, and Development, among other courses, will lead the education and dissemination area. On-the-ground programs will be led by Jim Patell and Bill Meehen. Building on his years of teaching Entrepreneurial Design for Extreme Affordability, Patell will manage programs aimed at partnering Stanford students with in-country organizations to develop new products and services. Following a period of coursework and preparation at Stanford, students will provide manpower and management support by working with startups, non-governmental organizations, and companies in country. Meehan will focus on supporting existing business leaders to scale and grow their enterprises through a combination of executive education, consulting, mentoring, and online courses.

Nobel laureate Michael Spence, the Philip H. Knight Professor and Dean, Emeritus, will chair the institute's advisory board, currently being formed. Spence is an authority on global economics in the developing world (see related story, page 18) and is the William R. Berkley Professor in Economics and Business at New York University.

"When we were first starting to think about how to address extreme poverty several years ago, I read Mike Spence's analysis for the World Bank," says Bob King. "It's pretty cool that Mike now is going to be the chair of the board of advisors."

The Kings' optimism about the kind of return they are looking for on this investment is palpable — and ambitious. "When we know we've changed 200 million lives, we'll know we're on our way," says Bob. Dottie, meanwhile, says she has another important expectation of SEED: "I would like it to have a happy spirit about it. That's important to me."

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