CATHERINE HOKE

United States,

Catherine seeks to break the cycle of incarceration in the U.S. by equipping men and women with criminal histories to ‘defy the odds’ and leverage their innate entrepreneurial skills to create profitable, sustainable, legal enterprises.

This profile below was prepared when Catherine Hoke was elected to the Ashoka Fellowship in 2013.

INTRODUCTION

Catherine seeks to break the cycle of incarceration in the U.S. by equipping men and women with criminal histories to ‘defy the odds’ and leverage their innate entrepreneurial skills to create profitable, sustainable, legal enterprises.




THE NEW IDEA

The idea behind Defy Ventures is both new and unconventional, and starts with the recognition that many men and women with criminal histories have strong entrepreneurial talent. They ran businesses and managed teams and displayed resourcefulness and initiative – but of course they were doing so illegally, perhaps as leaders of a gang, or a drug or auto theft ring. In founding Defy, Catherine asked herself: rather than relegate these individuals to minimum wage jobs after they have served their time, why not equip them to channel that talent in legitimate ways and launch business ventures? In doing so, individuals with criminal records will not only start successful business ventures, become employers, and pay taxes, but they will also become positive role models who actually help repair and stabilize their own communities. In this way, Defy seeks to both address the failures of the U.S. criminal justice system to rehabilitate and reintegrate formerly incarcerated men and women, while simultaneously shifting perceptions of what these individuals are capable of as human beings and as business leaders.

At the core of Defy is a year-long entrepreneurship and mentorship program. High-potential candidates are selected and matched with local business executives who provide guidance on business planning and leadership development and who help them compete for $100,000 in seed funding to launch new businesses. While the program resembles a fast-track MBA, the relationships and empathy developed between mentor and mentee are just as powerful. In fact, through these relationships, Catherine hopes to recruit advocates within the business community for broader prison reform – which, despite arguably being the civil rights issue of our time, will never gain traction unless it garners the attention of people in middle and upper class communities.

The New York City-based Defy model is based on the Prison Entrepreneurship Program (PEP), a similar program Catherine created and led in the Texas prison system in 2004. Catherine founded PEP after a six-year career in venture capital and private equity. During her five years as PEP’s CEO, PEP achieved a return-to-prison rate of less than 5% (compared with the national average of 50%); an employment rate of 98% (eight PEP graduates earned more than $100,000 a year in their first year out of prison); and the creation of more than 60 small businesses by its 600 graduates. In five years, PEP also recruited 7,500 executive and volunteer supporters nationally, enlisted hundreds of MBA student volunteers from 32 leading business school programs, and raised an entirely privately-funded annual budget of $2.5 million.

With Defy, Catherine’s goal is to develop a replicable model that can be franchised in every urban community in America, and to use the results to push for more systemic reform in our criminal justice system.




THE PROBLEM

The United States imprisons more people per capita than any other country in the world by far—with Russia and Rwanda a distant second and third. There are more than 2.3 million Americans behind bars, with a new prison or jail opening every week. But mass incarceration itself is only part of the problem: in the U.S., we also do a terrible job of keeping people out of prison after they have been released. Of the 600,000 people released from prison each year, close to 70% will be re-arrested for a new offense at an estimated cost to taxpayers of more than $250,000 per person for an average prison term of five years. The cycle is devastating for families and communities as well: 70 percent of children with an incarcerated parent will serve a prison sentence.

Part of the reason recidivism is so high is that the formerly incarcerated have great difficulty finding work. Though employers are not supposed to discriminate based on criminal records, studies show that if you’ve been in prison, you’re either half as likely (if you’re white) or one-third as likely (if you’re black) to get hired. And you’ll earn 40 percent less than someone with similar experience but no record. For those with business and leadership acumen, the post-prison realities can be especially disillusioning, as their talents are overshadowed by their criminal histories. Relegated to minimum wage jobs in high-poverty communities, many develop illegal businesses or engage in criminal transactions that appear more lucrative in the short-term. It is often more tempting to choose an opportunity to earn $5,000 in five minutes through illegal means than overcoming the perceived or real barriers to achieving meaningful, legal, and sustainable employment. The result is a revolving door to prison and a legacy of poverty, welfare dependence, and incarceration that is passed down through the generations.

The problem, therefore, is one of a large overlooked talent pool and a fundamental lack of opportunity. But it is sustained by a much deeper problem—one of stigmatization and disenfranchisement. Despite people having served their time, our society stacks the odds in nearly every way against these returning citizens and their communities. Transformative change will thus require a more realistic and empathetic understanding of the structural factors – both pre- and post-prison – that contribute to cycles of incarceration.




THE STRATEGY

Defy’s vision is to create a model that, in time, will provide life-transforming opportunities to people with criminal histories in every urban community in the United States. Its primary strategy is three-fold. First: continue to grow and refine Defy’s NYC program so that it can serve more students and serve them better. This includes engaging more executives, investors, and entrepreneurs in the private sector as mentors and volunteers, refining the curriculum, and more systematically tracking data on employment and recidivism. Second, Defy will begin fundraising for and designing a model of national expansion in partnership with urban business networks and NGOs. And third, Defy will aggressively leverage the stories of its graduates and volunteers to change the conversation about criminal justice in this country and build a coalition of voices who advocate for broader policy reforms.

The Defy entrepreneurship program itself is a mix of training and mentorship. It begins with a rigorous selection process that tests applicants’ personal competencies, work ethic, behavior patterns, and undeveloped potential. Those who make the final cut spend 12 months refining and demonstrating their entrepreneurial skills and abilities. This culminates in small business incubation that supports the most promising business concepts from each training class with the goal of building scalable, profit-generating ventures that provide employment to Defy graduates and others. The year is spent as much on leadership development and decision-making as on profit margins and supply chains. Training sessions focus on everything from life skills and parenting to the importance of being vulnerable and developing emotional literacy. Catherine has put certain rituals in place to break down the social and emotional barriers that many of the formerly incarcerated people have spent their lives building, including morning bear hugs and regular acknowledgments of student appreciation for one another.

The relationships between student entrepreneurs and their mentors are a defining component of Defy and are central both to the training and to the broader strategy of systemic change. From day one, corporate executives, investors, entrepreneurs and other business professionals are recruited to participate in the initial screening of applicants. These business leaders are often drawn to Defy because it has a high intrigue factor and because they may be frustrated with more traditional avenues for lending their time. According to Catherine, investors and executives also have a strong appreciation for the underdog – or a good “ROI story” – which makes for a strong fit.

Defy’s volunteer executives follow the student entrepreneurs as they progress through the program—investing their own time and expertise in the form of one-on-one coaching or leading a lesson on entrepreneurship for the entire class. They prepare students to effectively pitch their business ideas to potential investors and ultimately help connect the most promising, investment-ready ventures with seed funding. The skills and expertise that volunteers provide are invaluable, but their interaction with students is important for another reason: it helps the executives to develop a deeper understanding and empathy for men and women with criminal histories and their capabilities. Defy’s executive volunteers have noted how much they feel they have in common with the students, and how humbled they are by their experiences and their commitment. Catherine seeks to cultivate this understanding and new perspective into a powerful voice that the business community can use to advocate for criminal justice reform.

Catherine understands that, while there are enormous benefits in terms of economic opportunities and reduced recidivism for Defy students (benefits that extend far into their communities), systemic change will require reframing the way people in society view people with criminal histories. To that end, she and her team work hard to share their approach and their stories – initially focused on the business community – and whenever possible get those stories picked up in prominent media. This past fall, Defy was featured in The New York Times, which told the story of one of Defy’s early graduates, Jose Vasquez. Jose grew up in one of the poorest parts of Providence, Rhode Island and started selling drugs early – it was essentially the family business. By the time he was 17, Jose had spun off his own drug-selling venture and was making $2,000 a day. But he got caught, along with his father and two cousins—all of whom ended up in jail. Today, with Defy’s backing, Jose has successfully launched his first legitimate venture, a corporate concierge business. In November, he hired his first employee. He’s become a role model in his community and he anticipates hiring people from that community as well. Jose is also contributing back to Defy as a donor, recruiter, and a mentor himself, which Catherine had anticipated would happen. This type of supportive community is one of the fundamental pieces missing for most returning citizens. Filling that void is a significant step.

Over the next several years, Defy anticipates expanding to at least two more urban areas in the U.S. It will loosely follow a franchise model, providing capacity building support to improve partners’ operational excellence in volunteer recruitment and management; fundraising; board development; evaluation tools and metrics; and shared best practices for program execution. Given that Catherine’s goal is to create localized solutions in every urban community in America, she is building a broad, long-term resource development strategy that is focused on leveraging support from the private sector (e.g., corporations, private and family foundations, and wealthy individuals from the corporate and faith-based sectors) to sustain aggressive growth and expansion.

Defy Ventures incorporated in September 2010. It raised $1.2 million in 2012,—up from $775,000 in FY 2011 when Defy was creating its program model, hiring staff, and developing infrastructure. Its projected budget for 2013 is $1.5 million. To date, Defy has raised 100% of its funding from private and family foundations, corporations and individual donors. It has also begun exploring a plan that will allow Defy to recoup a percentage of its investment funds with earned income generated through licensing portions of Defy’s intellectual property (i.e., curriculum manuals and staff training). Another potential source of earned income may come from social enterprise profits derived from taking partial ownership of students’ businesses started through Defy’s Entrepreneurship Incubator and, in the longer run, Defy’s own social enterprise.

In addition to financial resources, Defy relies on substantial in-kind support that is provided by its more than 600 volunteers (who, to date have contributed over 5,000 hours). As executive involvement is a cornerstone feature of its program and fundraising model, Defy will continuously seek to build new partnerships with business leaders—particularly investors, entrepreneurs/business owners, lawyers, human resources and operations professionals—to donate their time and money to help Defy think through its replication and growth strategy and identify and cultivate the best human talent.




THE PERSON

Catherine grew up in a family that taught her never to shy away from a challenge. Her father was an immigrant inventor who came to the U.S. with $200 in his pocket and always encouraged her to create things for herself and solve problems. As early as age seven, she was making money and starting small businesses – selling recycled golf balls, breeding hamsters, and even earning $1 per match to wrestle neighbors to the ground (they were no match – Catherine went on to win a high school wrestling championship in California).

Catherine was always highly driven, and after finishing an undergraduate degree in business at Berkeley, pursued a career in venture capital and private equity, where for six years she sourced deals and became steeped in the world of entrepreneurship. In 2004, a friend invited her to tour some Texas penitentiaries as part of a prison ministry program, and the experience was transformative. Where she expected to find caged animals, she saw human beings. She recalls how quickly her “lock them up and throw away the key” attitude was turned on its head, and was ashamed by how prejudiced she had been.

As she spoke with the men in prison, something else happened: she recognized that many shared the same characteristics of the entrepreneurs she pursued in venture capital—charisma, resourcefulness, and the ability to turn a ‘no’ into a ‘yes.’ She understood that, unless they had access to the fundamentals of (legal) business and a support network to coach and guide them, most of these individuals were destined to repeat their crimes, spend their lives behind bars, and pass a legacy of crime and imprisonment to their children. Catherine couldn’t help but wonder: What if we equipped people who have entrepreneurial committed crimes to use their skills for good? Within a year, Catherine had dropped everything and moved to Texas to launch the Prison Entrepreneurship Program – an initiative that is still thriving in Texas and shaped her newest enterprise, Defy Ventures.




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