Capitalism of the 21st Century needs (and is getting) a massive makeover, and perhaps no one knows that better than Steve Down. The serial entrepreneur has built a veritable empire with profitable businesses that give back to worthy causes. Rather than simply writing a check to charities, Down creates companies that actually give back automatically as they donate revenue, elevating customers to philanthropists just by spending money at his companies. In the case of Even Stevens, the country’s fastest growing sandwich shop, and the soon-to-launch Steve’s Hotel, the givebacks are at a 1:1 ratio.
Down is re-imagining capitalism as a force for good that could replace welfare, and understandably, he’s excited about it. We had a chance to talk with him about his groundbreaking work:
U4G: Tell us how you began your journey in cause capitalism.
Steve Down: I was traveling, I was rushing to the airport. I was with my assistant, Lincoln, and my blood sugar dropped, so I had to get food. We went into a Jimmy John’s. They handed me a sandwich and apologized for the wait. I thought they were kidding me. It was just over a minute. They said their goal was under a minute. I thought, “Whatever.” I’m sitting down, I have half the sandwich in my mouth, it was their Italian Number Seven. It was a great sandwich. I turned to my assistant and I said, “Wow, that was an amazing experience. How do you improve upon this?” His reply was, “Steve, I challenge you to improve upon this concept. You said you’re the so-called serial entrepreneur.” He said, “I want to see for myself.”
Here I had this willing audience. I had worn out my wife and children years ago with all my business ideas. With a willing audience, I sat my sandwich down, sat there a couple minutes, and I said, “Tell you what, Lincoln. We’ll open up a restaurant near the University of Utah. And for every sandwich we serve, we’ll provide a sandwich of equal value to the community’s hungry. Sandwich for sandwich.” To my surprise, he dropped his sandwich. And I asked him, “What’s wrong? Did I offend you?” He said, “Steve, I would drive past a Quiznos, Jimmy John’s, and Subway to buy a sandwich from a place like that.” And I said, “Really?” He said, “Well, wouldn’t you?” And I said, “Well, perhaps. I just never thought of it before.” He said, “Well, Steve, you don’t pay me enough money to where I have money left over at the end of the month to be able to give to charity,” he said, “You take it for granted with your wealth. You have the opportunity to give at will.”
I said, “Well that’s fair.” And he then asked me, what would I call this restaurant. I said, “I think I’ll call it Even Stevens.” I asked him, “Do you get it?” And he said, “Of course I get it. The hungry and the privileged are on an even playing field.” I said, “I couldn’t have said it better.”
I pitched it to my wife, Colleen. She was excited about it. She’s very careful about her reaction, because she knows if she gets excited about any of my ideas, that means I’ve started another company. So, she’s very cautious. I pitched it to my kids, they were excited. A week later, friends of my kids asked me, “Mr. Down, when you build your first Even Stevens, can we work there?” I thought, “Okay, this is sounding viral to me.”
Here’s how it works. For each restaurant we choose four non-profit partners, and we give them a cash credit for every sandwich that we serve. They’re able to order those ingredients online based on their needs. If their clients are kids, for example, they may lean towards peanut butter and jam and whole wheat bread. If it’s Thanksgiving time, they can buy a whole turkey. As they go online, they can order the ingredients with their cash credit, and the product is then delivered from the freezer or pantry of our wholesaler partner to the freezer or pantry of the non-profit partner.
Our non-profit partners rave about it. For example, YWCA in Salt Lake City. They said on television that Even Stevens provides all of their food. All their food needs. I’m impressed with that since they’re the largest women and children’s shelter this side of the Mississippi. They said that now, any other cash donations they receive, they can actually provide the other needs, the other critical needs of these women and children. With Even Stevens, we’ve now surpassed over a million sandwiches sold, and provided a million in value in return. It took us two and a half years to accomplish a goal that took McDonald’s seven and a half years to achieve.
U4G: That’s amazing! Why do you think this concept has proven so successful?
SD: Because people caught the vision, and we deliver a great product, great service. It’s sustainable because we really take care of our customers first. And, if you take care of the customers first, that’s what makes it all possible. Cause capitalism is when you have a for-profit that chooses a non-profit as a partner. I doing this with my other businesses now.
We’re opening our first hotel in one year. Probably wouldn’t surprise you if I told you that it’s called Steve’s Hotel. For every hotel room you book, we will provide a reimbursement for a bed at a homeless shelter. Each hotel will choose one homeless shelter, and we believe that one hotel will sustain one homeless shelter. So three hotels in the area? It will completely provide for three homeless shelters.
It’s a lot of fun. You can’t compete with an idea such as cause capitalism, because the world is waiting for something like it.
Imagine if every business in the state of California chose as a partner, a non-profit. One non-profit partner, and it was sustainable as long as that company was in business. Imagine how that would change the state of California. California would no longer need healthcare. They would no longer need welfare. And it would be because we are taking care of our own. We’re very efficient in our give-back. None of our food is wasted. We don’t have any employees in the give-back—the non-profits have their employees that they did before. One hundred percent of every donation goes to the mouths of the hungry, and the beds for those who are homeless and so-forth.
U4G: There’s a lot of resistance to the idea of cause capitalism. This assumed wisdom is that it can’t be profitable. Where do you think that comes from?
SD: So, Michael (the president of Even Steven), he came from the restaurant business, had three successful restaurant concepts behind him, and said it took someone outside of the food industry, the restaurant business, to actually think of this. Anyone within the restaurant business wouldn’t have thought of it, because they would have seen it as being impossible with tough margins in the business, and such a high failure rate among restaurant chains. Cause capitalism is based on a philosophy of abundance rather than scarcity. We’re taught, in fact we are even wired in college, in our Economics 110 class, that the study of economics is a study of the scarcity of resources and how to use them. It’s only a theory. It’s a theory with no basis. I know we live in a world of abundance.
I believe my legacy is to demonstrate in the marketplace, in diverse companies, that the new capitalism is cause capitalism. People who don’t practice cause capitalism in 10 years, they’ll be perceived as politically incorrect and it will hurt their business.
U4G: Are your children expressing an interest in becoming entrepreneurs now?
SD: I introduced them to cause capitalism, and now, my sons are becoming young capitalists. They’re even beginning to act like me, where they never related to me before. I have seven children. They know that if all seven kids were constantly tapping into the family assets, that eventually those assets would be depleted and their inheritance is gone. But, if they had a way to expand the net worth, it becomes a legacy. A legacy that’s built on a philosophy of abundance.
U4G: Where did your abundance mindset come from?
SD: It’s been evolving for many years. I’m going to write a book about it. It’s going to be called Wealth Heart. A wealth heart is a heart that operates from abundance. I developed what I refer to as the abundance-scarcity paradigm. Where I can measure your level of abundance or scarcity based on the way you feel, think and act. The most abundant people are the people who create wealth. I teach that wealth is not earned, wealth is created. Once you understand the principles of wealth creation, you can create wealth again and again. The core value of a wealth creation is based on the philosophy of abundance. It has for me. My net worth is expanding at a rate that kind of blows my own mind. It’s because I strive with all of my heart to practice these principles of abundance.
It begins with my private equity partners, my investors. I have hundreds of investors across the country, and I focus on serving them. I better love my investor first and foremost because they provide the capital to make it all possible. Secondly, I’ve got to surely love my customers. That’s what makes the business sustainable. Love your customers. The principle of abundance is built on a value of loving. Loving your employees. With Even Stevens, we pay our experience creators 30% higher than market rate. We don’t call our dishwasher in our restaurants a dishwasher, we call him or her an experience creator. We couldn’t do it without him or her. We pay every employee 30% higher. Our leadership comp plans pay upwards of 30% more than most leading fast casual restaurants across the country. They can afford to buy a home for the first time in their lives. And we don’t need the government to mandate it. We do it because it’s the right thing to do, because it’s built on a principle of abundance.