In a recent article from Stanford Social Innovation Review, Carl Schram made the assertion that “All Entrepreneurship Is Social.” To wit: “Over the past decade or so, the term social entrepreneur has become a fashionable way of describing individuals and organizations that, in their attempts at large-scale change, blur the traditional boundaries between the for-profit and nonprofit sectors. Given the ceaseless appearance of innovations and new institutional forms, we should welcome a new term that allows us to think systematically about a still-emergent field.”
But… Schram says that one danger is that “the use of the modifier social will diminish the contributions of regular entrepreneurs—that is, people who create new companies and then grow them to scale. In the course of doing business as usual, these regular entrepreneurs create thousands of jobs, improve the quality of goods and services available to consumers, and ultimately raise standards of living. Indeed, the intertwined histories of business and health in the United States suggests that all entrepreneurship is social entrepreneurship.”
It’s an interesting thought and one that returned to me after reading Chris Dixon’s blog post titled “Capitalism just like Adam Smith pictured it.” Dixon says:
Venture capital is a shining example of capitalism just like Adam Smith pictured it, where private vice really does lead to public virtue. Consider, for example, two of the largest areas of venture investment: biotech and cleantech. Here we see the best and brightest – top science graduates from places like MIT and Stanford – devoting their lives to curing cancer and developing new energy sources. These students may be motivated by good will, but need not be, since they will also get rich if they succeed.
Now, the final point / connection I want to make is to take Dixon’s last sentence and apply it directly to the world of social entrepreneurship: “These [startup founders] may be motivated by good will, but need not be, since they will also get rich if they succeed.” This statement is very interesting to me because:
- Ever since learning about social entrepreneurship, I have been convinced of the power of for-profit social enterprise to do great things because profit and social impact are directly linked in many cases, as Dixon says. I love that! However…
- Dixon’s quote also makes me a little bit uneasy since it implies that people can start enterprises with a social cause (that “cure cancer” or “develop new energy sources”) without being motivated by good will.
And *that* possibility (not having “good” motivations) is what scares me a little bit. Because as much as I believe in the beneficial power of capitalistic / free market forces, I know they can also be used for exploitation. The BoP is definitely a large market, and I am a bit wary that once for-profit social enterprises become successful (and possibly become acquired by Fortune 500 companies), will a previously beneficial business for the developing world turn into one that ends up being detrimental? After all, we’ve already seen how acquisitions of startups by big companies turn out badly. Will big business just acquire these startups and turn them into a big marketing front for corporate social responsibility? I hope not!
Like Dixon, I do believe that the VC model can be called “capitalism just like Adam Smith pictured it,” but as social entrepreneurship progresses, we need to make sure that self-interest doesn’t turn into selfish interest.
