Really insightful, Jamie -- once you decouple impact and financial returns, it forces you to think about the rest of what a company is doing. For example, if profit is maximized, how is it shared with shareholder and / or stakeholders? If there is a commitment to impact, how is it anchored in the business practices and operations, much like Vincent pointed out.

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Thanks for this reflection! I wonder if the TOMS example isn't, in fact, a good way to highlight how impact-maximization and profit-maximization are logic opposites? Don't get me wrong, I'm not in the anti-Friedman group. But maximizing profits, like Bain Capital surely aims at, means that money is extracted as profits that could otherwise be used for creating positive impact. So, even though I agree that each case has to be reviewed carefully, I think it is also safe to say that profits and impact can't be maximized at the same time. In the end, it's always an either-or decision

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"If Sistema Bios reaches this scale, none of their investors will be complaining either. The better off their business is, the better off our climate and food security situations are. Impact is not always at the cost of business. In fact, Friedmans rejoice, their business is impact."

I see this statement as a logical oversimplification that is often used to justify competitive, growth/profit driven behavior. If their SOLUTION is an efficient method for reducing emissions and increasing yield, then you could argue the scaling of their SOLUTION may lead to scaled impact. This is NOT the same as the scaling of their BUSINESS as far as investors are concerned from a returns perspective. To highlight the distinction: the scaling of renewable energy is not the same as the scaling of Iberdrola. Their business is NOT impact.

Imagine the Sistema Bios team discovered that if they were to patent their technology and go to market as the sole vendor of their tech, they could serve 10% of the agriculture market in 5 years and be worth $1 Billion. But if they open source the technology, the technology would be used by 50% of the agriculture market in 5 years, but Sistem Bios would only be worth $50 Million, because they would be sharing the market with other vendors who adopt the technology and bring it to market, as well. The latter represents greater scale of impact, the former represents business success as it concerns investors. If Sistema Bios is primarily profit motivated, the latter choice cannot be considered. This hypothetical highlights the fact that to truly assess a business’s impact, one cannot simply consider their metrics as an individual company (ie how many shoes Tom’s donated or how many biodigesters Sistema Bio’s sells), but also how their presence / decisions have shifted the larger context in which they operate. Otherwise, one could falsely equate growing business with growing impact.

And impact isn’t solely scaled by bringing the solution to market, but also on the operational side, since the work culture and distribution of earnings within a company are one of the greatest impacts a company has on society / community. Imagine Sistema Bios entry level employees are currently making minimum wage and must depend on food stamps and secondary incomes to survive - affecting overall wellbeing outcomes for their families. And due to the current employment market, these employees have limited alternative job options. Let’s say currently Sistema Bios makes $100 Million profit, which is paid out in dividends to shareholders. An internal study finds that if Sistema Bios were to pay every employee a living wage, profit would drop to $20 Million, but the wellbeing impact on the community where employees live would be extremely positive: this represents another clear example of impact being at odds with profit, strictly on the operational side. Thus, we can also conculde that to truly assess a business’s impact, one cannot simply consider how the business influences the broader society through its delivery of services/solutions, but one must also assess what conditions the business creates for those operating it.

That said, whether a company is optimizing for impact isn’t strictly a matter of intention and values. You could have a founder who is extremely selfless and impact-driven, but is a terrible operator, and their business never gets off the ground and ultimately has close to 0 impact. But if you have a founder who is totally profit driven, you can be certain that at every crossroad of impact vs profit, impact will be deprioritized (in ways that may be invisible to those who commit the oversimplification of “business is impact"). I agree with your premise that business is not inherently good or bad. Business is just a tool. That said, we CAN have a perspective on whether we think the values / ethics of a founder are subjectively good or bad, and whether we feel they are skilled / effective at leveraging the tool of business as a vehicle for impact. And I also agree with your premise that impact and returns are not directly correlated, but I do feel that a business with market-rate returns for investors most certainly did not OPTIMIZE for impact - even if they HAVE a lot of impact. So if I was assessing whether to support a founder, I would not consider the quadrant where x-axis is impact and y-axis is returns, but instead consider the quadrant where x-axis is impact-driven values and y-axis is business acumen, and then support founders who land in the top right. I would expect these businesses to have very little profit, but be highly impactful.

Anyways, thanks for making the post, I enjoyed the read! Sorry for not being very succinct in my comment, I'm aware it's more of a rant than a thoughtfully structured argument lol.

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Great post! Lots to reflect on here. The quote at the bottom with the dapper gents is 💯

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