By Philipp Stauffer, Co-Founder and Managing Director, FYRFLY Venture Partners
If you haven’t seen Gordon Gekko say “Greed is Good,” then go watch his speech in the movie Wall Street, released in 1987. Greed, for lack of a better word, is an important ingredient in capitalism and efficient markets. However, there is a movement and mindset that, in FYRFLY’s opinion, will drive greater returns than pure capitalism. We call it “Greed for Good.”
Greed for Good has appeared under many different names. Salesforce founder and CEO Marc Benioff calls it “compassionate capitalism,” a way corporations can make doing good an integral part of doing well. Eighteen years since its founding, Salesforce is going strong with its 1-1-1 philanthropy program and has impressive results to show on both shareholders’ and stakeholders’ balance sheets. Similarly, John Mackey, Co-CEO at Whole Foods, is nurturing the concept of “conscious capitalism,” an approach that infuses businesses with a higher sense of purpose and interdependence.
The premise of Greed for Good is that compassion and consciousness lead to a better world, and a better world fuels a stronger brand with a more talented, passionate and committed team. That dedicated team creates and lives by an unbeatable culture, grounded in a mission to solve big problems. As a result, that brand can attract a more loyal customer base and increase customer lifetime value, one of the most important drivers of corporate value. In essence, mission-driven organizations become stronger and more resilient in the long run because they stand for something that matters.
Several consumer studies document the rise of Greed for Good over the past 10 years. Many companies have already used the model to achieve superior marketing ROI, as I highlighted in a previous article.
As an entrepreneur, you can instill a mission-driven culture from day one, before knowing if your company will succeed. Think about what could happen if thousands of start-ups and companies followed this mindset and dedicated their capital/profits, time and product to causes that matter to them. The outcome would be massive value creation that makes capitalism stronger, more resilient and more rewarding. Leaders in Greed for Good can drive exceptional returns while making the world better.
Marc Benioff and the other founders of Pledge 1% have inspired us at FYRFLY Venture Partners for years, and we’re proud to have been one of the first venture capital firms to adopt the concept. Pledge 1% calls for companies to donate 1% of their equity, time and product. We are not impact investors, but we believe giving is part of the formula for generating superior investment returns. We are early in this wave and are committed to measuring the impact of Greed for Good on investment performance.
At FYRFLY Venture Partners, we make seed-stage investments in data-driven technology teams that have global aspirations and game-changing ideas. One of our ‘stealth’ portfolio companies is Doky, a new breed of cloud productivity platforms. Founder and CEO Francesco Tripepi is passionate about how Doky’s platform can have an impact on education globally and is establishing a giving program on this mission. Francesco and his team pledged 1% and started their journey of giving back by kicking off the Doky Foundation.
The Doky Foundation intends to go beyond 1% in terms of product donations and plans to offer its platform for free to any school and student in need. Francesco and his team would love to eliminate the digital divide by helping students access all the tools they need to learn and reach their potential. Doky’s initial programs will focus on education in African countries, but the initiative has global aspirations.
This is just one example of what we see in the next breed of entrepreneurs and start-ups. Giving back does not start once companies are doing well – it starts from the beginning, from day one. Impact is built into the company DNA and Pledge 1% is the new normal.
Guided by Greed for Good, we will create great companies with sustained profitability and meaningful value creation. To that end, we have a request for our fellow VCs and investors: let’s proactively support our entrepreneurs to pursue Greed for Good at the Board level. If we take on the mission to prove that giving enhances shareholder value, we can set a model that Wall Street will follow.
In an article summarizing his book Give and Take, Adam Grant recounts what Bill Gates said at the 2008 World Economic Forum in Davos: “There are two great forces of human nature – self-interest, and caring for others.” He argues that in many organizations, those forces come together with damaging effect. Adam explains that with thoughtful management though, these two forces can be yoked in such a way that caring for others becomes the best strategy for the most ambitious. At FYRFLY Venture Partners, we believe that is not only true for a company’s internal environment but also for the economy as a whole. As we seed companies that cherish Greed for Good, we will create new global winners. Stay tuned.
Originally posted: November 29, 2016
