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What Silicon Valley Cannot Teach Social Entrepreneurs

May 28th, 2013Business, California, Design, National, Tech

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Guest post by Matthew Manos, founder and CEO of verynice, a LA-based design studio that dedicates 50% of their efforts to free design for nonprofits. 

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There had been a really popular article floating around on my twitter feed called “6 Things Silicon Valley Can Teach Social Entrepreneurs”. After reading it, I was like: “Awesome!” I liked it. But then I realized one major component was left out – a big thing, the one thing that Silicon Valley definitely cannot teach Social Entrepreneurs: legacy.

I live in Los Angeles, but don’t call me an outsider – I grew up in the heart of Silicon Valley, everyone and their mother (literally) was an entrepreneur growing up, but here is the thing, Silicon Valley has changed. We all have noticed it, it’s been happening for years, but ever since Facebook bought Instagram, the issues have heightened. Much of the mentality of Silicon Valley founders is not longevity, it is acquisition. More and more we are seeing companies arise that I like to call “feature companies.” These are companies that dig deep into existing platforms (like facebook, twitter, google, etc.) in order to find one missing piece. Once they find that missing piece, or “feature,” they capitalize on it, basing their entire company around building that feature in order to roll the dice and hopefully be acquired. These startups, like Instagram, have no business plan. They have 0 revenue (for the most part). They are perfectly fine with the potential of closing their doors in a year or two (funny what one billion dollars can do). This mentality is really good if you want to be a gambler, but if you want to be a Social Entrepreneur, this mentality is very counterintuitive.

At the heart and soul of the Social Enterprise movement is legacy. We all have wildly different goals, that is for sure, but the one thing we are all connected by is wanting to leave this world a better place than how we found it. We are all given a short time, and I think the biggest mistake a lot of entrepreneurs make is that they design and optimize their vision to provide the largest financial return possible. Now, making money is not a bad thing, but what should be known and understood, is that in the end, our salaries, the cars we drive, the square footage of our homes… none of that matters. What matters is the legacy that our business and our vision can leave behind – a legacy that has the ability to shape, disrupt, or destroy, a familiar system. When you disrupt a familiar system, you change perspective – you change the way a community can define themselves to inspire future innovation.

The whole concept of acquisition cripples legacy. If you want to get out fast, it means you aren’t planning to stay long. If you aren’t planning to stay long, your impact will lose value and authenticity. When you are a Social Entrepreneur, there is no “exit.” You leave when the job is done – you “exit” when the problem is solved.

3 Responses

  1. Rob Hanna says:

    Hi Matthew,

    Your points about legacy being important and distinctive from the “acquisition spirit” of Silicon Valley are poignant and valid. Perhaps even more so for us “impact investors” as for the people we invest in, being social entrepreneurs.

    My days on Wall Street always amused me by how ardently people would talk about “buying” and “selling”, depending on their vested interest of the day. What rarely ever happened rhetorically, but always happened in practice, was that such conversations rarely embraced equally deep analysis and explanations of “buying AND selling”. It’s easy to overlook that both acts occur at exactly the same time in an ever-evolving, constantly lock-step configuration towards each other.

    Successful innovations are another good example of this principle of overlooked mutuality: innovations do not appear spontaneously out of contemplative ether, but in direct relationship to some related status quo that needs to go… or is now on the way out just a little bit faster. So too “legacy AND exits” suffer the same neglect, as each have exactly the same constructive relationship: one arises upon a complicit and mutual response to the other. I raise this point because leading a reader’s attention to focus on one concept of “legacy” without integration of “exit” mutuality is more than rhetorically dangerous, it also eliminates opportunities for innovation in prevailing practice.

    As example, Philanthropy a professional industry has made a giant mess of our innate human potentials for driving innovations that could solve many, many social problems at scale. One primary reason is just such rhetorical irresponsibility in perpetuating wooly thinking that produces even crappier results. Now we suffer the sins of our fathers as too many gobble-dee-gook professionals in philanthropy invoke and embellish “legacy” into “sustainability” absent any understanding of the necessary merits of “exits”. It’s still wooly and half-witted thinking no matter which words are used. Warren Buffet and Bill Gates finally started banging on philanthropists as insiders, asking others to “give it all away”. This is helpful. Unfortunately too few are willing to recognize that the mandate is also vested in how they give it away to the vast majority of intermediaries as recipients of this largesse: planned exits for intermediaries should also be valued and practiced under this very same bright light.

    And so we still find too many dollars and good people paying for “races without finish lines” and “doing good work that’s important” without a single iota of clarity around when we’ll actually succeed at doing it, or even what success looks like in terms of net positive externalities. As long as we embrace a one-sided view that organizational sustainability is sacrosanct and desirable we will more likely benefit white collar consultants, intermediary startups and lackluster organizations then the people and communities living with actual problems we wish to help the most.

    As for social entrepreneurs and blended value organizations with added profit motives, legacy and sustainability are less threatening yet equally beguiling for encouraging missteps in growing their organizations: we have the valuations backwards at best, where achieving going concern status should not be considered a worthy milestone of “social” entrepreneurial success until the impacts are proven to scale. For “social” to mean anything more than a flavor adjective, there should be little to no value in longer running, legacy organizations whenever the market focus of their impact is to eliminate a problem, destroy their market and be done with their organizationally defining mandate and move on.

    These going concern and legacy operating constructs mean ample wasted energy and resources figuring out how to linger around running a business model in a market that should disappear, hopefully sooner than later. Such operational dissonance is one reason we’re attracting ever more resources to serve start-up operating needs without recognizing that we’re really in the business of reducing and hopefully eliminating the market of impact customers (e.g. with cancer, illiteracy, homelessness, etc.) for that organization and hopefully the entire industry. If we’re really good.

    There’s plenty enough historical data around that reveals continued funding of causes and “capacity building” of operating entities in and of itself has rarely eliminated or significantly reduced the incidence and prevalence of ills that matter to people that should benefit the most from such organizations (whether or not they’re the paying customers for such impacts). Perhaps that’s why so many remain content to preach wooly thoughts that the greater virtue is making sustainable promises and building capacity for a better tomorrow–which means continued funding. And yes, legacy does have its place where we wish to create assets and good things in perpetuity for ourselves and hopefully others. Yet the ledger of clarity and integrity demands both sides be accounted for, where “legacy AND exit” appear hand in hand. And whenever it does we prove we can build better, scalable impacts with better results now, not tomorrow.

    As mom always said “tomorrow never comes”, so I got my chores done today. Wish more people would.

    Best,
    Rob

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  3. Darron says:

    keep spririt, congratz to all of you