Social Business thoughts

A month or two ago I came across an amazing piece by Muhammad Yunus, where he introduces the ‘Social Business’. I do hope the meme builds momentum, and I’m hoping my ‘dot-org‘ concept can grow to be the technological sector of the social business world. It’s a great narrowing of the term ‘Social Enterprise‘, which I feel has almost been too broadly adopted so as to become less meaningful. I’m looking for a more narrow focus – entities that are fundamentally both in service of a mission and operated to draw income from the market, not from charity. He articulates this better than I’ve seen before, with his full cost recovery social business – leaving behind the dependency of a charity, one enters the business world with ‘limitless possibilities’.

I especially liked his points about a Social Stock Market, that it needs to be a set of separate concepts, with different measures and media outlets. But I find his ideas on how to get there a bit weak – having a design competition that rewards the best ones with funding. He also suggests that someone soon could just hatch a Social Stock Market, and a little research found that Rockefeller is already moving to fund one. But I’m fearful that it’s too much too soon, and that a bunch of not so great social enterprises will give it a bad name.

Though maybe it would just be a sector of the Social Stock Market over time, one thing I’ve been thinking about, especially as OpenGeo progresses towards full cost recovery, is making it so money generated by social businesses is viral. The current thought with OpenGeo is that relatively soon we’ll spin it off in to its own company, fully owned by the foundation (TOPP), just like the Mozilla Corporation. Most profit will then go back to TOPP (with a portion towards employee profit sharing), which is a not for profit and by definition has to reinvest the money back in service of its mission. We’ve been thinking about what ‘outside investment’ might look like, and I’m pretty sure we’d want it to operate like the money our funder is putting in now – all returns must go back in service of our mission. But I’m thinking that outside investors could then have control over which TOPP initiatives their returns could go towards, and could choose to direct a new project, leveraging a team of programmers and designers from TOPP. If there was a social stock market, however, it would make perfect sense that their returns could go to other ventures that also guarantee to put their returns back on the alternate market.

Thus money would operate like source code with the GPL – it only helps those who agree to the same set of principles, towards a commons that can be used by others with the same values. I like this because I think it cuts a nice middle ground between non-profit charity giving and the social enterprise investment now that has little way of knowing how much investors actually do care about the profit bottom line. I suppose the money could also go back in to non-profits that are more geared towards charity. This would help foundations allow to make their endowments work for good, instead of just having the capital in traditional investments. But I’d hope that instead of just returning back to foundation endowments it boot straps social venture capital firms and incubators and more capital in service of social businesses. And thus shares in the social stock market (or at least sector thereof) is a real alternative with teeth, where success breeds further capital for more success, instead of just a nice idea.

I have not read any wider literature on these things, so this may be very naive, or an idea already tried, but it sounds potentially cool to me, and it’s really just trying to extend the proto-model we have at TOPP. But I hope to read more on where things are at with social enterprise and where they can move forward, as we’ve mostly been operating in a vacuum.