Blog: Business Planning

Guest blog from my colleague, Adam Brock, Director of Social Enterprise at Joining Vision and Action (formerly JVA Consulting):

How can a well-meaning startup avoid “Silicon Valley Syndrome” and actually use a social startup to create real value for society?

Every era has an industry that epitomizes its values. At the turn of the 20th century, nascent car companies like Ford and Packard were the symbols of a growing middle class. A couple of generations later, the best and brightest were lured to IBM and Xerox to develop the infrastructure of the information age. And in the 1980s, a booming Wall Street captured that decade’s spirit of self-interest.

As for today, there’s little doubt that the startup has become 2016’s quintessential business model. Inspired by the garage-to-riches mythology of Bill Gates and Steve Jobs, millions of young people are spending their prime years honing business plans, practicing sales pitches and tweaking their personal brands. Whereas the previous “it” industries profoundly reshaped society through corporate R&D, the rise of the startup has enabled scrappy entrepreneurs working out of college dorm rooms and coffee shops to transform how we listen to music, how we get around, even how we communicate our very identity.

But is all this disruption actually making the world a better place? It depends, as it turns out, on what kind of startup we’re talking about. Technically, the word can describe any kind of business in its launch phase. But the ones that dominate our news feeds and app screens are all startups of a certain flavor: those that are based in Silicon Valley, funded by millions of dollars in venture capital, and hoping to be bought out by one of the industry’s titans.

Business Models That Increase Middle-Class Convenience Through Automated Algorithms

For all their rhetoric of a better world through tech, most business models of these startups amount to increasing convenience for middle-class consumers through automated algorithms. Very few of them even manage to create a positive cash flow, electing instead to subsist off of venture capital funding until they get bought out or go public. Yet because these specific kinds of startups are the most visible, we’ve accepted their approach – brash, informal and dead set on glory – as the norm for all new businesses.

Fortunately, not everyone is buying it. As of late, social enterprise consultants, celebrated technology authors and syndicated business columnists have stripped away the gee-whiz factor and critiqued Silicon Valley’s startup model.

How to Create Real Value for Society

So how can a well-meaning social startup avoid “Silicon Valley Syndrome” and actually create real value for society? Here are a few pointers:

What is your goal? For many centuries, a successful business was one that improved a community by meeting its real needs. But at some point, “success” came to mean relaying an investment into short-term profit. Regardless of their original intent, many Silicon Valley startups get pushed into the second category by their over-reliance on venture capital. Social enterprise startups, meanwhile, build social impact into their core business model, and would never accept investment that causes them to compromise their mission for the sake of profit.
How big is best? The Silicon Valley ecosystem thinks big, pushing entrepreneurs towards high-stakes, industry-shaking concepts – the vast majority of which fail. For every Instagram, we’re left with 99 other similar ventures that fell flat. The sad thing is, many of these businesses could have thrived on a more modest level, sticking with a specific community or service. It’s great to think big, but sometimes, small is beautiful.
How long are you in it for? Tech companies tend to go all in on the 21st-century obsession with quick fixes. But it can take years, or even generations, for institutions to reach their full potential. Even if the founders are long gone by then, planning for the long view is important from Day 1.
As more and more entrepreneurs and thought leaders realize the downsides of the much-lauded tech startup, the backlash can’t be far behind. Before long, we’re likely find ourselves in a new era. And with any luck, the values we bring to our startups today will help define whatever comes next.

——–

Joining Vision and Action, a Denver-based consulting firm, offers a new program called the Social Enterprise Navigator.  This one-on-one social enterprise coaching series guides social change organizations through an efficient, well-defined, highly-collaborative process to grow and sustain long-term impact via the marketplace.  Adam Brock is the director of that program.