The world is startup crazy. And more and more startups are looking for popularity before money: “Get big first, and figure out how to make money later.” For a time, my company Paperight was among them, till the end of our funding runway filled the horizon. (We’re still not profitable, but getting better at making money.)
This way of thinking is cannon fodder for cynics. “That sounds like a really bad idea,” they’ll say. Of course it’s a bad idea — it’s a terrible idea! For the founders and their investors, at least, their odds of failure are enormous. Their families, too, face the prospect of catastrophic losses.
But for the rest of the world, it may be just what we need most.
We’re seeing the rise of an entirely new sector: a new kind of organisation, funded by speculators, that isn’t operating as a for-profit company and isn’t a formal non-profit. We might call it a ‘not-yet-for-profit’.
This kind of organisation can address problems in the world that others can’t. It doesn’t have to chase higher margins or short-term sales targets. It doesn’t have to fit the straitjacket of philanthropic money. It’s driven by committed entrepreneurs — not day-job managers or floppy volunteers — and these champions are aiming to do enough good for people that perhaps, one day, someone might pay them to do it.
A NYPF can and must be wildly ambitious. And it must build an audience not of customers but of followers: an army of believers in a grand movement, a new and better way, a growing crowd on a journey to a happier world. And to keep its following, it must remain true to its mission, or lose its hard-won support to the next NYFP.
This growing sector may already be attracting billions of dollars in investment: money going into enterprises that often have direct or cumulative social impact. This is a very good thing. For example, HealthTap has signed up 48000 doctors to answer people’s health questions, saving unnecessary visits to doctors and hospitals. Founder Ron Gutman says, “For now, the service is free. I believe we have a responsibility to always provide a baseline service for free for those who are less fortunate. But I am a social capitalist, and I want to create value for everyone involved in HealthTap, including our investors. Eventually, we will make money […] Can you imagine the impact we can have by providing billions of people with access to physicians and specialists they can’t get access to today? We could literally change the world.” HealthTap has raised almost $38 million in funding.
Of course not all NYFPs are making a difference, or a difference you’d care about. Many can seem entirely meaningless. But very few, if any, are harmful.
Is this sustainable? The NYFPs themselves are almost never sustainable. Most will burn out in a couple of years. But others will take their place.
The real question is whether the investors funding them will all give up and go home. We can’t know, but I like to think that well-heeled people will always be looking to put a lottery ticket on a startup in the hope that they’re backing the next Facebook. Many want to do something meaningful with their money, too. And for as long as they do, the world’s better for it.