Make Purpose Your Company’s Foundation
Shripriya Mahesh discusses the value of purpose at the Product Leader Summit
When thinking of what makes a startup successful, our minds often go to metrics — revenue, customers acquired, orders booked. But in Shripriya Mahesh’s work as an investor and product leader, she’s seen over and over again the power of one very different factor: Purpose.
Mahesh is a Partner at Omidyar Network, where she heads the Emerging Tech investment team. In her career as an investor, advisor and executive at companies like eBay, she’s seen first-hand the impact companies have when it is built on a foundation of a clearly articulated purpose. “A purpose-driven company is good for employees, good for customers, and good for business. It’s also a chance to make a dent in some of the world’s biggest problems,” Mahesh recently told a group of product leaders at the Omidyar Network Product Leader Summit. “As entrepreneurs, CEOs, founders, it’s really easy to think there are two paths. One of purpose, and one of profit. That’s simply not the case any longer.”
In her talk, Mahesh explains why purpose-driven companies are the way of the future. She describes what a purpose-driven startup looks like, and what such a mindset can accomplish not just for a company, but for the world at large. She also details the real, tangible benefits of purpose on the business in areas like employee retention and customer acquisition. Finally, Mahesh shares her own transformative experience with the motivational power of working at a purpose driven company.
Mahesh shares the following parable to demonstrate how purpose translates in real life:
“Say you come across a construction site. You ask a man smashing rocks with a sledgehammer what he’s up to.
‘I’m breaking rocks,’ he replies.
You see another man doing the same and ask him what he’s doing.
‘I’m making a living,’ the second man says.
You come across a third man with a sledgehammer smashing rocks. When you ask him what he’s doing, he responds: ‘I’m building a cathedral.’”
“This third man is part of something bigger. He has a larger purpose,” Mahesh says. “All companies with purpose have a long term goal that, if they achieve it, will create massive positive impact on society at scale.”
The Power of Purpose
One such example of a company begins with the story of Thomaz Srougi. Thomaz was a banking and private equity professional in Brazil. Ten years into a successful career, he felt lost in life. He dabbled in side hobbies, tried to challenge himself at work and, eventually, enrolled in grad school. But that feeling of drifting stuck with Thomaz. One day, it hit him: His country, Brazil, was in the midst of a massive healthcare crisis. An estimated 70% of Brazilians — 100 million people — are poor, uninsured and “medically homeless,” meaning they rely on the SUS public system for healthcare.
SUS patients must wait 10 months just to see a doctor, and 70% of them rate the quality of care as “poor” or “extremely poor.” The result is a huge population — 100 million people — who aren’t able to access timely, quality healthcare, if they’re able to access it at all.
Thomaz had discovered his purpose. He wanted to help people find quality, affordable healthcare — create a far better option than the one Brazilians had at the moment. So he started Dr. Consulta six years ago. Today, Dr.Consulta operates over 30 healthcare clinics in Sao Paulo — most of them are located in favelas, or slums. The business is remarkable for many reasons:
- Dr. Consulta is able to hire and retain the best doctors and staff in the country
- Patients are able to see a Dr. Consulta doctor in less than two weeks and at an affordable price of $30/visit
- Patient satisfaction is at 98%
- 100% of the clinics are profitable a year after opening for business
“What sets Dr. Consulta apart is that it’s infused with purpose. Every employee there feels like they have a purpose. Yes, it’s a for-profit chain of health care clinics with the goal of generating revenue. But beyond that, it has a bigger purpose — to engage the 100 million medically homeless in Brazil — not just treat the poor but to delight them when they need it most,” Mahesh says. “For the Emerging Tech team at Omidyar Network, purpose is a core principle of the investment decisions we make. We seek to invest in for-profit companies that will have impact at scale.”
“We’re looking for companies that fuse purpose and profit.”
Bottom Line Benefits
So what are the benefits of purpose? First, let’s look at what happens at the employee level.
When your company has purpose and employees feel they are building a cathedral, it benefits both them and the business. A recent Harvard Business Review study found that employees who derive meaning from their work report almost:
- 2x higher job satisfaction
- 1.4x more engagement at work
- Are 3x more likely to stay with their organization
Currently, 71% of millennials report feeling not engaged or actively disengaged at work. Purpose helps your company stand out. It also helps you retain the talent you’ve already attracted. Gallup’s research has also shown that one of the strongest factors for retaining Millennials, Gen Xers, and Baby Boomers is emphasizing mission and purpose. In short, as these studies found, “Feeling a sense of purpose affects employee engagement and retention, which in turn affects company performance.”
Marketing can also take a huge boost from purpose. A We First study shows:
- Only 6% of consumers believe the singular purpose of business is to make money for its shareholders
- 91% of consumers would switch brands if a different one was purpose-driven and had similar price and quality
- 71% percent of consumers would help a brand promote its products/services if it was purpose-driven
Finally, purpose impacts the bottom line. In the book Corporate Culture And Performance, Harvard Business School professors John Kotter and James Heskett show that over a decade-long period, purposeful, value-driven companies outperform their counterparts in stock price by a factor of 12.
“Some of the most successful companies of our generation have been built on the foundation of a strong purpose,” Mahesh says. Here are a few examples of purpose-driven companies below, along with their valuations:
- eBay: “Empowering people and creating economic opportunity.” ($40 billion)
- AirBnb: “Making people around the world feel they could belong anywhere.” ($31 billion)
- Tesla: “Accelerating the world’s transition to sustainable energy.” ($49 billion)
“When it comes to employee satisfaction, retention, and performance, purpose matters. Not only does having a strong purpose impact employees, it also impacts customers. As product people, we know that connecting with the customer and putting the customer first is critical,” Mahesh says. “When you have a purpose, all of your employees will have this focus. And you’ll hear powerful stories about the customers whose lives you are positively impacting.”
“When you have purpose on your side, it’s like a secret weapon.”
Build Your Cathedral
Mahesh has experienced the power of purpose in her own career. “In 2001, I was running product management and product marketing for a company in San Francisco. Things were fine. Then a friend introduced me to a company in San Jose that was looking for a senior product leader. As I drove down from the city to interview, I kept thinking ‘Wow, this is ridiculously far. No way am I going to take this job and drive all the way here every day!’ Mahesh says. “But then, I met the people. It was like nothing I’d experienced — every single person was both inspired by their work and inspiring to be around. They were building a cathedral.”
Mahesh went on to accept the job, moving to San Jose to work for eBay. “I was lucky to head global product during our hypergrowth years of 2001 to 2006. When I was there, I knew that I was part of something truly special. eBay’s purpose was and continues to be ‘Empowering people by connecting millions of buyers and sellers around the world and creating economic opportunity,’” Mahesh says. “This purpose linked us, as employees, to something bigger than ourselves.”
At eBay, Mahesh could see the cathedral she was building. She was inspired by customer stories, such as that of a welfare mom who was able to get off welfare and provide for her family by selling items she found at local garage sales on eBay for 10x what she paid.
“A company with purpose can create positive value that is far greater than the sum of its parts. And these companies are the ones who will attract the best minds, have the most passionate customers and will be the ones who will change the world,” Mahesh says.
“As product leaders, there is literally nothing you can’t build. Ask yourself: What is the cathedral I want to build?”