- Mission-Driven, Double Bottom Line - Double bottom line companies measure their success on both financial performance and social impact. They are typically mission-driven companies with founders who are passionate about the mission for its own sake rather than financially driven where the company's focus is a means to an end. One of our portfolio companies (sprung out of Paul Graham's Y-Combinator), Codecademy, aspires to teach the world to code for free. The founders are focused on helping millions of people learn to code so that they can improve their job prospects and move up the income ladder. A company I co-founded back in 2000, Upromise, is focused on helping families save money for college, a necessary ticket to the American Dream. At its peak, Upromise helped over 10 million families save over $30 billion. Both of these companies are mission-driven, bottom-line for profit companies that raised lots of venture capital money, hired great people and built businesses focused on generating profits. There are many others like them, particularly in the world of education, health care and financial services.
- Impact Investing - A new class of investors is emerging at the intersection of financially-driven investments and social initiatives called impact investing. I am seeing impact investing funds popping up all over the world (e.g., one from Israel came into my inbox this morning). Deval Patrick, former Governor of Massachusetts, recently joined Bain Capital to start a new impact investing fund to find a sustainable, middle ground between profitable investments and social responsibility. The field is still unproven and there are many questions to be sorted out (e.g., should the investment return target be similar to "regular" investing or consciously lower?), but this notion has led folks to talk about “triple bottom lines" for firms: financial, social, and environmental.
- Public Entrepreneurship - Another powerful trend is directing entrepreneurial skills and efforts to innovate in the public sector. At Harvard Business School, Professor Mitch Weiss teaches a class called Public Entrepreneurship that focuses on this area. The notion is that entrepreneurs can work with civic leaders to make a difference in the world through technology, social change, and/or political transparency. Public Entrepreneurship can be for profit or not for profit. Not for profit examples include President Obama's Open Government Initiative, which has included making massive amounts of government data available to the public in machine readable form. Google's ambitious Sidewalk Labs is a for profit effort in this area, focused on applying technology to solve urban problems. The thesis of many public entrepreneurial efforts is that if both the government and the private sector can cooperate across silos, sharing information and tools to innovate together, we can materially improve the infrastructure and welfare of our communities.
- Social Entrepreneurship (aka Non-Profits That Act Like For Profits) - Social entrepreneurs are non-profits that draw on business techniques to address social issues, but explicitly in a not-for-profit structure. EdX, an ambitious joint venture created by MIT and Harvard, is an an example of a non-profit that acts like a for profit. EdX hires top engineers and marketers focused on building an online learning platform that teaches college-level courses worldwide for free, radically expanding global accessibility to high quality education. Another example is Google.org, whose mission is to develop products that give nonprofits the technology or the funds they need to implement change. Since 2010, they have raised over $20 million to fight human trafficking and child abuse, which was given to multiple organizations that are ready to use the money quickly and effectively.
Human progress is often the result of multi-disciplinarian efforts. I am optimistic that the trends Paul Graham points to - and is in the midst of helping accelerate - are going to ultimately have a very positive impact on society at all levels. But it will take some inspired entrepreneurs to get us there.