E-commerce site eyes do-gooders

Yobie Benjamin and Andy Rappaport, two software geeks who bonded over causes like young-voter registration during John Kerry's campaign for president in 2004, were sitting around talking about the state of the world after the catastrophic events of Hurricane Katrina.

"Katrina highlighted some bad stuff in this country, and that's just the tip of the iceberg," said Benjamin, a former partner at consulting firm Ernst & Young. "And the question of giving came up. How do you build a model of giving and create a successful business around it?"

Andy Rappaport,
GoodStorm

"We both observed that outright giving was not sustainable for a whole bunch of reasons. For us, it was about teaching people how to fish," he said.

The next day, Oct. 4, GoodStorm was incorporated. Earlier this month, the site--an e-commerce effort with a charitable bent--was launched from the work of eight freshly hired people. Within a day, at least one charity, the Princess Project, had raised enough money to buy prom dresses for two teenage girls who couldn't afford them, through the sale of eight T-shirts.

That's GoodStorm. Its tagline: "Capitalism Done Right."

It may sound hokey or even a devious scam, if you're the jaded type. But the business model itself is one that's turning creative, on-demand marketplaces like Zazzle.com and CafePress.com into moneymaking ventures. It's just that GoodStorm's mission is giving, whether it's to charities, nonprofits, individuals or the open-source community.

The concept is simple: Allow individuals or businesses to submit a design--whether a photo, graphic, logo, artwork or catchy phrase--to the host Web site, which will create a storefront for the design. Then, visitors to the site can buy the design in the form of a T-shirt, hat, bag or other object and have it shipped directly to them. The host and sellers split the commission from the sale.

Based in San Francisco, GoodStorm sets itself apart by not only promoting charitable giving, but also by giving a much greater portion of the profit to its partners. Sellers are to collect 70 percent of the sale price of their goods, while GoodStorm takes 30 percent. In contrast, Zazzle gives sellers roughly 20 percent commission and keeps the rest.

GoodStorm already has the likes of Working Assets, the progressive long-distance company, selling T-shirts. It is promoting a $19.99 shirt depicting presidential adviser Karl Rove in jail, along with the words "I did not know her name, I did not leak her name"--a reference to the grand jury investigation into the disclosure of the name of CIA agent Valerie Plame. The profits from the sale will go to Working Assets charitable funds.

GoodStorm says it expects to sign other partners including Unicef, the Red Cross and a big Silicon Valley software company. It has also contracted L.A. designers to place stylish clothing fashions on the site. And it employs a creative director and artist to put up designs.

Benjamin said that in order to run a socially responsible company, he and Rappaport, a partner at venture capital firm August Capital, agreed that the founders needed to forfeit the desire for runaway profits, aiming instead for rather modest, sustainable earnings.

The expectation is that the marketplace can work even with 70 percent going elsewhere because it's based on on-demand fulfillment--GoodStorm doesn't have to keep inventory that is like "dead money" once it's on shelves, as Benjamin calls it. Instead, when orders are placed, they're filled through an apparel company near GoodStorm's offices. The apparel company, in which Benjamin holds a stake, specializes in silk-screen T-shirt printing. New digital printers mean the company can produce single items as needed.

GoodStorm was built in just 10 weeks in part because it adopted open-source software called Drupal, a content management system. Kieran Lal, the company's chief technology officer, created a customized version of Drupal for the project, and he's working on updated versions to launch in the coming weeks that will include meet-up and organizational tools for members. That way, people with a cause can find each other, organize meetings and make promotional T-shirts all via GoodStorm.

Katrin Verclas, co-director of Aspiration Technologies, a nonprofit that focuses on software resources for other nonprofits, signed up for a storefront on GoodStorm on Monday.

"We all need schwag all the time, so we might as well support it through a venture that feeds back," said Verclas, who also sponsors Drupal.

"The nice thing about this is that they are contributing back to the Drupal open-source society with new e-commerce functionality inherent in the development of Goodstorm," she said.