A month or so after Paul Graham and company started Y Combinator, that visionary mix of venture capital and summer camp, they took the motto “Make Something People Want.”
Graham talks about this in his April essay, Be Good—
Another thing we tell founders is not to worry too much about the business model, at least at first. Not because making money is unimportant, but because it’s so much easier than building something great.
He goes on to argue that the combination of these ideas — making something people want and not worrying too much about making money — is a working description of a charity. And that the intersection of charity and business is a really interesting one for our times. He sees startups acting like charities and wonders, Would charities work as startups?
The rest of the article is well worth reading, so I’ll not spoil it.
But it did get me thinking about the charities I know. While many are still focused on remedying a need (which can be a command economy version of making something people want), there’s a lot of excitement around bringing the market into the nonprofit world. And most now worry about both needs and sustainability.
Both for- and non-profit perspectives require that we give people something.
There’s another thread here, though, about the value of goodness in the for-profit world.Umair Haque, the Harvard Business School economist, writes about the lack of giving and the current banking crisis. Haque says it’s not so much a crisis of confidence as one of strategy.
In finance, nobody knows what bonds are worth precisely because firms strived for so long to conceal information about risk. Traditional competitive advantage dictated this strategy — there was value in “trade secrets” and limiting information about prices and risk. But in contemporary markets, those have proved to be flawed strategies. Haque writes that against a background of cheap, always-on interaction:
[W]e’re both always and everywhere better off not dealing in lemons at all – because what goes around comes around. If I sell you a lemon today, you might hack it, tweak it, remix it, and sell it back to me slightly altered tomorrow.
At our velocity, nobody — the little guy least of all — can afford to be evil.
As Graham points out, we little guys get great benefits from openness and goodness. People want to help. Folks are motivated.
This new ground for firms. The best study of giving and goodness I know is by scholar-writerLewis Hyde. It’s just been re-issued as The Gift: Creativity and the Artist in the Modern World. Hyde looks at gifts and giving in various cultures and finds giving to be essential for productive artists. Graham and Haque argue that it’s good for-profit enterprises, too.
But perhaps giving and markets are not such strangers. After all, firms make “goods” — the origin of that noun brings us right back to making stuff people want.
Let us all get back to making goods.