Posted by: Ben | July 31, 2008

Social Businesses

In theorizing what Galapag.us would look like, one of the major issues is personal privacy versus capitalist profit maximization interest. People hear that they need to enter information to a web site, and the first thing they think is, “Is this company going to use my data to make money off me and make my life worse?”

But Galapag.us was always meant to serve the interests of individuals, not the interests of the companies trying to market shit to them.

I was on a flight back from Barcelona and was reading Muhammad Yunus’s “Creating a World Without Poverty”. And one of the major themes he talks about is his proposition for the social business model. From Wikipedia, this is defined as “[seeking] to profit from acts that generate social improvements and serve a broader human development purpose. A key attribute of social businesses is that an increase in revenue corresponds to an incremental social enhancement. The social mission will permeate the culture and structure of the organization and the dual bottom lines – social and economic will be in equal standing with the firm pursuing long term maximization of both.”

The key insight is that a company naturally (and should have) has the ultimate incentive to pursue profit. Corporate Social Responsibility (CSR) is nice but no one in the company will pursue it instead of a profit.

But if you build a social business that has the core goal of helping people, and not making money, then this changes the entire makeup of the company. You still hire the best people at market rates, but your goals and business plan and incentives are geared towards showing progress in helping people.

This seems far more consistent with my ultimate goals for Galapag.us. The goal of that company is still to hire the best people and have the best employee training programs and use the best tools out there, but it’s all towards creating a standardized reputation platform that people can trust to be transparent, comprehensive, and encouraging of a feedback loop.

This also pushes the incentive for Galapag.us to sell marketing data away, in favor of focusing on subscriptions and added value for those who contribute more to the community. Money will be made, and incentives will be there for keeping costs down, but any profits will go towards expanding the platform and building the social reputation system, not towards shareholders and profit-maximizing interests.

I’m very happy to have come across Yunus’s words at such an important time. Galapag.us is coming together, and now it has a stronger foundation from which to base its core values off of. It is not philanthropic, or dependent on charity or outside-funding — it is competitive and yet still contributes directly to the social good by representing peoples’ interests.

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