Updated: Jul 14, 2020
The high-tech world is a tough one, full of moral conflicts. In this post, we will talk about social entrepreneurship, money, and how these two manage to work together, if at all.
"We’re making the world a better place" is a phrase commonly used by entrepreneurs to justify their ventures. But does everyone really put this lofty social goal at the forefront of their company meetings, investor presentations, and before they turn off the light at night? The simple answer is “No”. No, because there are some things that sound great in keynote lectures and cover stories, but when the moment of truth arrives when the social purpose clashes with the money bag, the choice becomes a little bit more complex.
According to Wikipedia, “Social entrepreneurship is an approach by individuals, groups, start-up companies or entrepreneurs, in which they develop, fund and implement solutions to social, cultural, or environmental issues. This concept may be applied to a wide range of organizations, which vary in size, aims, and beliefs. For-profit entrepreneurs typically measure performance using business metrics like profit, revenues, and increases in stock prices. Social entrepreneurs, however, are either non-profits, or they blend for-profit goals with generating a positive "return to society". Therefore, they use different metrics. Social entrepreneurship typically attempts to further broad social, cultural, and environmental goals often associated with the voluntary sector in areas such as poverty alleviation, health care, and community development.”
And so, came out to the high-tech world, the Zebra, a startup that its business model operates as per a black and white formula, combining social goals with financial responsibility and business stability. Contrary to the pursuit of the Unicorn title (a $1 billion venture valuation), the Zebra prefers to stay focused on contributing a positive social impact to the greater good of the world, while maximizing profits, because ultimately, every business needs money to survive.
Skeptics will argue that money and social good cannot be intertwined. For example, Google, whose founders in 2000 went so far as to writing "Don't Be Evil" in the company's ethical code, a phrase that often guided its corporate culture to such an extent that it served as a wireless internet connection password in the employee transportation, removed it from its code of conduct in 2018, without giving an explanation as to why. Which, on the one hand, is very alarming, and on the other, makes sense when you think about it: What giant company manages to maintain values of goodness and honesty while making billions of dollars?
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Well, it turns out that there are some companies that try to combine the two, and in the meantime, quite successfully. Take, for example, the American dating app Bumble, which was established in 2014 with the feminist guideline that only women can initiate courtship. According to the charismatic and dominant founder and CEO, Whitney Wolfe Herd, Bumble not only connects people like its competitors but tries to change courtship habits around the world as a way of empowering women and as a first step towards overthrowing the patriarchy. The utopian vision of social justice drives every decision in the company from recruiting, 82% of whom are women in almost all management roles, to marketing strategy through successful feminist women representation such as Serena Williams, who even invested in the company, and up to changing state laws when Wolfe Herd launched and ran a successful Texas law lobby that made sending nude photos (such as male genitals) against the will of the recipients illegal in the country in June 2019. According to TechCrunch, Bumble is currently valued at $3 billion. Not too shabby for a social startup.
Another example is the Israeli-based InsurTech (Insurance Technologies) company, Lemonade, which operates a website and a mobile app according to the P2P model (i.e. Peer to Peer, consumer to consumer) where insurance can be purchased for renters and apartment owners. According to Michael Eisenberg, co-founder of Aleph Venture Capital, that invested in Lemonade, there were a number of reasons for investing that included the professional team, moats, the market size, the venture stage, and on top of that, the social mission:
“We believe “Mission-Driven Cultures Win.” Shai and Daniel both have a mission to turn insurance into a social good. They wanted people to help other people (P2P) achieve financial safety and security. We want to be part of mission-driven businesses because they are important and because they attract the best talent.” — Michael A. Eisenberg
In April 2019, Lemonade announced a huge $300 million funding deal at an estimated value of more than $2 billion — making it not only a Unicorn but one of the highest-valued private companies in Israel.