Did you know companies that practice “conscious capitalism” show a 1600% higher return on profits? And that companies with a more diverse board are more profitable?
A recent panel in NYC called Entrepreneurship with a Conscience hosted a discussion on ‘doing good’ with your business (plus some great tips for finding, starting or raising money for that new idea).
The event featured alumni from “Friends” schools, including:
Moderator – Marshall Heinberg, previously Head of Investment Banking and Senior Managing Director at Oppenheimer & Co., Inc.
Neil Blumenthal, co-founder and co-CEO of Warby Parker
Jessica Holsey, President of Susty Party
Peter Laughter, CEO of Wall Street Services and a founding member of the NYC Chapter of Conscious Capitalism
Given the title of the event, as well as the hosts—a group of ‘Friends’ schools—many of the moderator’s questions had an ethical angle to them. ‘Friends’ schools are known for their Quaker roots, and in the case of Brooklyn Friends, as well as others, encourage leadership in areas such as service and ethics. The panel topic is timely, as businesses with a focus on socially responsible causes are on the rise.
Some themes clearly emerged from the discussion:
Panelists supported co-leadership and multi-stakeholder models
Consumers value style and price first, even in socially conscious businesses
“Greenwashing” is rampant—B Corp certification helps legitimize environmental stewardship
Socially conscious businesses are more profitable
Why a Socially Conscious Business?
Many folks have heard of Warby Parker. They sell high-design eyeglasses at a value price using a model that has disrupted the market: It allows customers to order eyeglasses online, try them on at home, and then return the unwanted glasses. Co-founder Neil Blumenthal followed his ‘Friends’ education with a not-for-profit job selling glasses to people making less than $4 a day, then with a stint at Wharton business school. Among his advice to the audience: hire for passion, think about long term impact, and build a stakeholder-centric model. He noted that at Warby Parker, they screen “entitlement” out in the hiring process as the “root of all evil”.
For Jessica Holsey from Susty Party, an undergraduate degree from Harvard led her to her dream job on Wall Street. Inevitably, the question ‘to-grad school or not-to-grad school’ arose. But the entrepreneurial itch kicked in, as did the desire to create something that had a positive impact on the world. Enter Susty Party—based in Brooklyn, NY, Susty creates disposable tableware that is compostable yet colorful, party-ready, and responsibly made in partnership with non-profit factories who employ the visually impaired community.
When panelist Peter Laughter shared his point of view as the CEO of a Wall Street recruiting firm and founding member of NYC’s Conscious Capitalism, the audience needed a bit more orientation. What is Conscious Capitalism [besides, seemingly, an oxymoron]?
Conscious Capitalism is a movement that builds on the foundations of Capitalism to elevate the innate potential of business to make a positive impact on the world. There are four organizing principles:
Higher Purpose (including, but more than, making money)
Stakeholder Orientation (creating value with and for various stakeholders, i.e., customers, employees, vendors, investors, communities, etc.)
Conscious Leadership (creating value for and harmonizing the interests of the business stakeholders)
Conscious Culture: (developing the ethos underlying the social fabric of a business)
Peter advocated for a multi-stakeholder framework, contending companies that do this are more successful. He stated that companies which practice Conscious Capitalism are 1600% more profitable over a 15 year period on the S&P 500, and added that companies with more women and overall diversity on their boards are also more profitable. He warned against having a “myopic vision of profit.”
Applying a multi-stakeholder model to your business is one thing. Splitting the highest leadership duties quite another.
Neil and his Warby Parker co-founder, Dave Gilboa, are co-CEO’s. According to Fortune magazine, “in the last 25 years, only 21 companies in the Fortune 500 have used the co-CEO structure,” (before Oracle added itself that list in September 2014). These numbers suggest that for larger companies, co-leadership has a ways to go, but for smaller companies, faces fewer obstacles.
Neil explained that because ‘Work’ is evolving, turning into more of a community, this evolution lends itself to a shared leadership style. He likened it to a flat organization, an organizational model that is very popular among startups, and where titles may not be indicative of roles or reporting structures. According to Neil, “If you ask people at Warby Parker, they would say Dave and Neil share a brain; and that’s good.” When you are a founder, “It’s not work-life balance, it’s work life-integration,” punctuated Neil.
In Jessica’s case, she and her co-founder and co-president, Emily Doubilet, have complementary skills. Jessica is highly adept at finance while Emily excels at the creative. If the business question at hand is operations or finance oriented, Jessica will likely have the final word.
Environmental Stewardship and Diversity
It seems every business has gone green, from your bank to the oil companies to the dry cleaners. So how do you tell green fact from fiction? Greenwashing is the practice of using marketing and PR to deceptively present a company or its products as green, when in truth, they are predominantly not. Panelists advised businesses could seek a B Corp certification, which signals to consumers that the business has been certified by the nonprofit B Lab “to meet rigorous standards of social and environmental performance, accountability, and transparency.” B Corp likens itself to the Fair Trade movement for coffee.
Warby Parker knows that its consumers care about doing good. But when their customers look to buy a pair of eyeglasses, fashion and cost come first. The company made a choice to integrate social good into their culture—it drives internal mission and philosophies, and helps with recruiting. According to the company, Warby’s “Buy a Pair, Give a Pair” program has contributed to the distribution of over one million eyeglasses to people in need. Additionally, Warby Parker works with partners who train men and women in developing countries to give basic eye exams and sell glasses to their communities at affordable prices, thus positively impacting local economies.
What Keeps You Up at Night
So what keeps Warby Parker up at night? “Are there four guys somewhere thinking about how to disrupt us?” asked Neil, then assuredly answering his own question [Yes]. “The cost of starting a new business is decreasing. So are we moving fast enough? Talent—are we hiring the right people for the role?” Given there is a shortage of engineers, product people and data scientists, Neil added that businesses have to be thoughtful about hiring.
Starting Your Own Business and Raising Funds
The group shared some recommendations for looking for a job, starting your own business, raising funds, and more:
Network – Treat networking like mediation or any other practice. Don’t just network when you need it.
Ask to help – Ask people what you can do to help. Be a value creator.
Meet investors in advance – And vet them the way you would new hires to test fit.
Acknowledge what raising money means – Investors are expecting a liquidity event. If you want to run your company for a long time, your way, then raising funds might not be right for you.
Plan – What are you going to use the money for? Hiring, new products, etc.
Ask for more – value your business and ask for what you are worth.