Do all entrepreneurs set out to try and change the world? It's a mission oft mocked in Mike Judge's excellent satire Silicon Valley. But Judge knows that "satire works best when it hews close to the line between the outlandish and the possible," and disrupting the status quo has become a mantra for a new influx of socially-conscious entrepreneurs. Making money isn't enough: they need to change the world, too.
A cynic might suggest that this is just a smart move on the part of entrepreneurs to acquire more customers, a well thought-out response to public perceptions of corporate greed. Regardless of motive, Charlotte Davidson of the law firm Mishcon de Reya is right to point out that even investors are showing a growing interest in what is known as the "double bottom line". "Entrepreneurs," she says, "have to demonstrate not only the financial efficacy of their business model but also the social impact they will deliver".
Davidson's comments were made during a Leap 100 Power Breakfast last week, where Osper founder Alick Varma shared his experiences of building a profitable business with a social agenda. His story is an intriguing one: unlike most kids, the London-born entrepreneur was brought up managing his own money. At 11, he was given a monthly allowance that would make most parents' eyes water, but there was no additional pocket money, no loans from the Bank of Mum and Dad once that allowance was spent. By university, the benefits were clear: Varma felt like the only student at Warwick who knew how to set a budget.
He says: "Those experiences loop round to why I created a mobile bank for 8-18 year olds. As a business, our first goal was to teach adults to manage money in a world where over three-quarters of young people admit to making at least one financial mistake by the time they're 30."
It was a worthy ambition, and Varma believes that social impact has to be achieved by starting with the individual: "If we could get a service that children and adults love and use, and which helps them build good habits, then we knew it would amplify itself to a social level. We think about having social impact by having impact at the individual level which then scales to the masses, rather than the other way around," he says.
As with many impact enterprises, the lines are blurred between Osper's commercial and social ambitions. Varma defines social impact as "building a product that people will love, use and pay for. If more children have the debit card, that means more children are receiving and saving money, and the impact is greater". So, too, is the profit.
But even social impact businesses need to be businesses first and foremost. As Kevin McCarthy, a partner at Mishcon de Reya, pointed out last week: "Without a successful and sustainable model, any impact they might have will be short lived." On the flip side, however, if an impact business fails to deliver on its initial mission, it fails to validate its very existence. Consider Varma's example: "We have the largest breakdown of children's spending habits - by age, gender and postcode - in the UK. We could collaborate with retailers tomorrow on market promotions. But that doesn't fit into why we set up the company".
It could be a tough pill to swallow for the most archetypal profit-driven entrepreneurs: you might have to put bettering the world ahead of making money.Suggest a correction