Harnessing the “Hustle”
At first glance, the ad on Craigslist looks like yet another Internet scam aimed at the desperate, but it represents a very real opportunity for ex-cons struggling to make a living legally. The ad tells the story of Defy Ventures, a New York City-based nonprofit that helps ex-cons “defy the odds” of going back to jail by helping them launch their own entrepreneurial businesses. It’s a way to circumvent the very considerable difficulties people face trying to find jobs once they’ve been convicted of a felony: Create your own business, and become the employer, not the employee.
“It’s really hard to get hired; everything they say is true,” says Kim Morris, who falsified a mortgage application and was sentenced to two years in federal prison for bank fraud. She had previously worked in foreclosure mediation at a New Jersey courthouse and for a private investment firm. But after being released, she found herself stuck in a minimum-wage job at a health club. That’s when she saw Defy’s ad.
“They were holding interviews to get into the program the very next day in midtown Manhattan,” she says. That was last September, and she has since started a cleaning business, The Cleaned Space, which serves mainly property managers, though her clients also include some homeowners and an Airbnb host. “Defy changed my mindset,” she says. “I would have still been looking for a job.” Now, she’s about to hire her first employee.
Morris says that Catherine Hoke—who founded Defy in 2010 and serves as the nonprofit’s CEO—reminded her that she “did not come to Defy to be a cleaning person; I’m a CEO.”
On Defy’s website, Hoke talks about her career in venture capital and private equity, and how she founded the Prison Entrepreneurship Program in Texas. Hoke says that what struck her early on was that many prisoners were already successful entrepreneurs in illegitimate businesses like drug dealing, and could be successful once released if that “hustle” could be channeled into legitimate businesses.
Like Morris, most of Defy’s participants start service-related businesses “that don’t require a lot of financial overhead,” says Lindsay Freeman, Defy’s chief of staff, citing industries such as catering, photography or arts and crafts. So far, about 100 companies have been founded by Defy’s entrepreneurs-in-training or EITs, she says.
The program starts with a one-month orientation, followed by a yearlong series of business and personal development courses that are delivered online and supplemented by peer-to-peer meetings and intensive mentoring from leading entrepreneurs such as Silicon Valley venture capitalist Tim Draper and former New York Stock Exchange CEO Duncan Niederauer—both of whom are listed on Defy’s website as among its “400+ donors” through their foundations.
Another big donor? Google. Toward the end of 2014, Defy opened its second location in San Francisco with a $500,000 grant from the Internet giant. Last year, Defy’s budget was $2.4 million, and this year it will be $3.5 million to $4 million, Freeman says.
Coss Marte says Defy is an “amazing program” and that the mentors like Draper and Niederauer “treat us as human beings and not like ex-felons.” He says that the mentors will “hold your hand, and not only during your time in the program. I’m still in contact with all of these CEOs and executives. Whenever I need them, I email them, and they’re super responsive and really care about my success.”
At one time, Marte was a drug dealer on the Lower East Side with more than $2 million in annual revenue and about 20 people working for his 24-hour cocaine delivery service—until a wiretap on one of his lieutenants’ cellphones landed him in jail for five years. In July of 2013—four months after his release—he signed up for Defy’s program, where he says he took “MBA-style” courses on drafting a business plan, marketing and branding—“everything you need to know to start a business and do it right.” He took a workout regimen he developed in prison and used it to launch Coss Athletics, which is about to expand to its second location. He says he’s also going to rebrand his business as “Con Body” with the tag line: “Do the time.”
Defy helps its EITs fund their businesses via competitions modeled on the TV show “Shark Tank,” where they pitch their ideas and can win seed capital to fund their businesses. Morris and Marte say they’ve both won a cumulative $10,000 with Defy.
Defy’s backers have also trained EITs how to raise money in other ways. For example, Jessica Nowlan, who dropped out of school in the seventh grade and grew up on the streets of San Francisco’s Tenderloin neighborhood, has raised $10,107 from 87 people through a Kickstarter campaign for her do-it-yourself gift kit business, Create Shoppe, while also winning $2,700 in a pitch competition.
Defy’s EITs pay tuition so they have some skin in the game, Freeman says. Morris says she’s paying $100 a month, but “Defy gives you opportunities to make money,” like sales expos where they can sell their products. Defy also gives them branded T-shirts they can sell, and bonuses for good referrals, Freeman says.
“Generally, people find a way to make it work,” Freeman says.
But it’s not an easy program, either, Morris says, noting that out of her group of 50 who started the program in September, only seven are left.
Defy’s EITs “have to be willing to take ownership of their pasts, show remorse over their crimes and a desire to change. They take random drug tests and have to stay clean, and they have to have a willingness to work hard,” Freeman says.
Defy’s five-year plan includes expanding into other cities, while “developing a product that can be licensed to other groups” who want to create similar programs in their communities.
Defy recently held a “Transform the Hustle” launch party in New York City for its Defy Professional Network, led by Todd Young, an interest rate trader at Swiss Re Asset Management. The goal of DFN is to get more young professionals involved in Defy as mentors and fundraisers, he says. To that end, DFN is planning a charity run in the fall and other events, he says.