How startups can truly make a social impact

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In the Amazonian forests, wildlife presenter Charlie Hamilton Jones was looking to make a statement. He went and bought a patch of Amazonian wildlife, looking to protect it for generations.

Instead, he wound up buying a cocaine plantation. The most dangerous one in the area, owned by the “most dangerous family.”

When he went to confront the drug dealers, he was in for a surprise. Far from being gun-toting murderers, they were desperately powerless. Charlie had always demonized those who had spoiled his precious forests: now he saw that they were merely doing what they had to do to survive.

They implored him to “pay them so they wouldn’t do it.”

The story of the 20th century has been the elevation of private incentives to a quasi-religion. Capitalism won the battle of isms, and reigns supreme to this day. Credited with lifting billions out of poverty, the march of private capital seemed to be a matter of destiny.

Now that the story has flipped to the next chapter, we can clearly see that there are numerous issues with rising private incentives above social needs. From climate change to political and economic chaos, the world seems to lurch from crisis to crisis, with no end in sight.

There is a sense that many systems are broken, and that there needs to be change. But where does it begin?

What can be done starts with the digital communities building the future. These startups have achieved such an impact that even in the material economy of the past, they are worth billions of dollars. They can, and should be a force for change.

What does it take for startups to change rather than adapt to society?

1. Define new metrics

GDP rewards everything from traffic jams to oil spills. It is the crudest way to account for innovation: it only captures the benefits that can be captured privately from social good.

This leads to entire companies shutting off access to social goods in order to reap private benefit: LinkedIn has built an entire empire on restricting valuable information away from those that need it, for example.

Sales or users are the easiest way to measure growth, but for forward-thinking startups, a measure of social impact should be implemented as a key performance indicator: from the number of people who are able to learn something new on an edtech platform, to the number of trees saved on a communications platform.

Socially-oriented investors like the Omidyar Network and the non-profit arm of Y Combinator will notice. Ultimately, social value will spread as a key metric not only for intrinsic reasons, but for extrinsic ones as well.

FyoKx 730x410 How startups can truly make a social impact

Technology that helps empower and enable others is immensely powerful, for all of the right reasons. Communities that grow from that technology can generate advances so powerful that huge amounts of will flow regardless: we saw this with Linux spawning the $10 billion+ Red Hatcorporation.

2. Think long-term

Startups can’t just think of short-term growth curves. In order to create a sustainable society, startups must think of the long-term future.

Instead of just focusing on short-term profit, Salman Khan of Khan Academy has put himself on record as to saying that the profit motive actually harms his mission of creating sustainable long-term value.

This is why Khan Academy has been created with a non-for-profit model: in order to create the social value it needs to, unhindered by shareholders constantly demanding the company sacrifice itself to get some numbers now.

The great startups of the future will be able to pursue their social goals without much thought to private goals.

They will build for centuries rather than building for fiscal years.

3. Strive to change behavior—not adapt to it

Respected venture capitalist Chris Dixon has argued persuasively that the best startup ideas are not the freshest ones: they are the old ideas left around that were pursued with ambition by new startups that looked to control all facets of the value chain.

From Uber, to Tesla, to Warby Parker, these startups embedded their digital culture into every facet of the value chain. They challenged entrenched traditional incumbents head-on by fundamentally changing user behavior patterns.

People who use Uber or Airbnb would find it difficult to come back to the traditional way of hailing a cab, or taking a hotel out. That is because these full-stack startups chose to change their user’s behavior rather than adapt to it.

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