After another whistle-stop week, which included a very exciting set of meetings about our Launchpad programmes in Birmingham and the Black Country, I’ve finally sat down to answer the second question I alluded to in my post on Elastic Capital. What is our approach to the ‘social’ in our ‘social investment’.
Now, regular readers of this blog – both of you – please be warned, this post mentions company / corporate forms, asset locks and governance structures. If these are things that are more likely to sink your boat than float it, then I can happily point you to a couple of YouTube videos to while away some time:
WHAT WE DO
We look for and invest in people with a social mission, rather than people with a specific business plan.
Why do we do this? Because the business plan will always change. That’s not necessarily a bad thing: it’s inevitable for a sustainable business to emerge over the long term.
After all, Wrigley’s didn’t always sell chewing gum. At the end of the 19th Century, William Wrigley Jr. moved to Chicago to work as a soap and baking powder salesman.
How he came to believe that Chicago was full of people without access to soap or budding bakers who couldn’t find enough supplies is beside the point. His idea to sell more products was to start offering free chewing gum with every purchase.
The gum proved to be significantly more popular than the soap, and like any good entrepreneur he smelled a good business opportunity and chased after it. The rest, as they say, is history.
Similarly, and more recently, Groupon started out as a website called The Point, which was a social good fundraising site that ran on a “tipping point” system similar to Kickstarter. As a side project, this idea was applied to local deals where a discount was unlocked if a certain number of people pledged to buy a product or service. This side project swiftly overtook the main website, and quicker than you can say “tipping point” three times, people no longer saw the point of The Point.
So suffice to say, these are some of the hundreds of thousands (if not millions) examples of why we invest in people, and the plan comes second.
The question I referred to at the start, reiterated on Twitter by Nick Temple, was about Hub Launchpad’s approach to the ‘social’ in our investment.
My response is that it is the missions people come to us with which are social, not the money we invest. Money is just part of how we support individuals to try and make the world a better place.
For anyone familiar with the social enterprise sector, the debate around definition of social enterprise, company form, asset locks and governance structures is a frequently dry, often dreaded, but consistently important one. James Perry wrote an interesting piece in Pioneers Post on this, and Nick himself responded, by sorts, on his own blog.
The purpose and outcome of this conversation is, I think, to ensure that social purpose remains a part of the organization. Now I agree entirely that publicly owned assets – such as a hospital – should continue to remain in public ownership (whether public sector or more broadly ‘public’ ownership).
I also agree that high standards around governance and transparency in organisations is a good thing. But this isn’t just for social organisations, it is crucial for any organization to be effective and to be trusted. Asset locks, governance structures and company legal forms are really all tools to try and ensure a certain type of behaviour in individuals who run organisations.
But as we’ve seen over the last couple of weeks, organisations with even the most engineered and structured governance arrangements are subject to the actions of individuals who are a part of it.
OUR APPROACH TO THE SOCIAL
There is a very famous quote from the cultural anthropologist Margaret Mead which influenced me when considering whether to take the plunge to set up social organisations with big missions:
“Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it’s the only thing that ever has.”
Organisations are great, insofar as they offer a structure for individuals to create impact. I don’t think there is one legal structure, definition or governance model which is appropriate in for every organization that wants to create impact.
There is a deeply personal and complex set of decisions that need to be taken when founding a company to decide how to best create the impact you want from your efforts. Organisations, and the intellectual property they create, are fundamentally dependent on the individuals who run and operate it.
We have multiple safeguards in place at Hub Launchpad, through our assessment process, investment terms and agreements with all of the founders on our accelerators. We do this to ensure we set the bar as high as possible when looking for people who have the talent and character to be a part of our cohorts of founders.
Ultimately, we have to put our trust in the people we invest in at Hub Launchpad. It is a risk, of course it is. But it is a risk we are inherently comfortable taking – we assume the best in people and view this risk in a positive light.
In order to ensure that founders have the best chance of success, I think it is crucial that we embrace the idea that different businesses require different corporate forms and governance structures.
Each case is entirely dependent on the ambitions, resources and individuals involved. So we are agnostic when it comes to corporate form: our investment is structured so that we don’t force anyone into any one structure.
Where we are not agnostic is when it comes to the social mission: there simply has to be one inherent in any team that we invest in.