A couple of months a go I attended a brilliant event hosted by Tech Unicorn where leaders from the sharing economy, e-commerce, sustainability, and policy; discussed the impact of fast growing technology companies on our planet. In what many described as ‘The Great Exhibition of People, Planet, and Profit’, we have learned a lot about ourselves; our planet; and the role of business in our society.
What is the real value of tech unicorns?
The Dotcom bubble highlights the dangers of this approach: when the bubble burst in 2000, the FTSE 100 was at 6,096 and it has taken 15 long years to regain its present values of 6,091. This shows financial markets have stagnated for over a decade due to the unrealistic valuations of technology companies.
There are currently 153 tech unicorns with a total valuation of $535 Billion. They have grown at a rate of 40% in 2015 alone and there are fears we are on the verge of another technology bubble. By labelling unicorns on the basis of their financial value, not only are we at risk of recreating the Dotcom bubble, we are also overlooking other qualities that are equally important such as empathy, wellbeing, stewardship, and social justice; and it is these qualities that are increasingly important if we are to solve our most challenging environmental and social problems.
The B-Corp movement tackle this problem by offering a template for companies who want to value themselves based on their broader contribution to society. 1,400 companies around the world have voluntarily held themselves up for a higher degree of accountability, and in doing so, acting as an inspiration for others to use businesses as a force for good.
Investors tackle this problem by adjusting the share price of a company with Environment, Social, and Governance (ESG) factors, and in doing so, directing funds towards companies who cares about people and planet. There are indications this is not only the right thing to do, but over time, these types of investors perform better financially.
Therefore, we are seeing not only a template of how unicorns should be valued, but also the creation of a funding ecosystem to support a new generation of ‘Sustainability Unicorns’.
The real meaning of making good money.
If money is the biggest threat to a startup’s mission, does it mean it is impossible to make money, and to do good?
This ‘contradiction’ does not apply to Etsy. They have shown it is possible to make money and do good, by developing offline communities to support sellers; by charging a low commission to help them earn a sustainable income; and by cultivating a strong culture of empathy, authenticity, and craftsmanship . These initiatives results in a workforce that cares, and a loyal user base that consistently produces unique and sought after products.
Etsy’s commercial success proves it is possible to be a ‘Sustainability Unicorn’, and that in order to become one, start-ups need to have a business model that generates profits because of their values, rather than in spite of it.
What is power without responsibility?
It is widely acknowledged that great power comes with great responsibility; but in the case of tech unicorns, there appears to be a disconnect between the power of a company, and their responsibility to stakeholders.
On one hand, technology companies show a lack of responsibility for their users. For example, 78% of UK’s 10 to 12 year olds are on Facebook, even though 13 is the minimum age. There are concerns that in the pursuit of profits and growth, not enough has been done to ensure a company’s product is being used in a responsible manner. These concerns have been played out in the public arena for Uber,Snapchat, and many other fast growing technology companies.
On the other hand, technology companies prioritise the needs of shareholders over other stakeholders (eg their community), and this not only increases the concentration of wealth and power, but also distorts incentives as shareholders are often in a position to extract an income by doing little work. The concentration of wealth is magnified by tech unicorns, because they are by definition, private companies controlled by a small number of shareholders.
Is responsibility defined by name or by nature?
One of the biggest temptations for businesses is to use sustainability as a name, in order to generate positive PR; and just like Juliet’s indifference to Romeo’s name or origin in Romeo And Juliet, it would appear consumers and employees show a similar degree of indifference to responsibility as a name.
In order to appeal to the hearts and minds of consumers and employees, responsibility must be embedded into a company’s DNA, and not to be treated as a checklist that needs to be ticked off.
Mission led companies are one of the biggest trend in the start-up community, and given that a company’s mission statement is an outward expression of their DNA, mission led start-ups with a clearly articulated vision to be sustainable, are in the best position to create companies that are responsible by name as well as by nature.
The truths and consequences of the sharing economy
Human civilisation has always shared since the dawn of time, but the term ‘sharing economy’ only became a mainstream concept following the financial success of tech unicorns such as Airbnb and Uber.
So what are the consequences if the act of sharing moves from word of mouth to online?
For consumers, the ‘digitalisation’ of sharing allows us to consume more with less, and only when we need to, without ever owning an asset. This on-demand model lies at the heart of how the sharing economy operates, and offers us a solution to how we, as consumers, can save our planet.
Despite the promises of the sharing economy in heralding a kinder way to consume, we must be weary at the efficiency in which consumption is possible, and whether it results in more, rather than less consumption. For example, some studies have shown more people are using taxis and less buses as a result of Uber.
For sellers, the sharing economy allows anyone to become an entrepreneur in less than 60 seconds, and this can make an enormous difference to a freelancer’s quality of life.
For example, 85% of cleaners on Hassle.com operated in unregulated and non-transparent markets where monopolist middle-men dictate when they work, who they work for, and their salary. The sharing economy liberates the cleaners to trade directly with consumers, and in doing so, empowering them with the free will to dictate their own terms of employment. A focus on making the platform fairer for the suppliers was the key to the Hassle.com success story.
For policy makers, the sharing economy presents new challenges on how to support freelancers. Legally, the employment framework does not provide the same level of security to freelancers as they do for employees; and commercially, many sharing economy companies are not willing to treat freelancers as employees due to the added financial burden. New employment laws and policies are therefore necessary, in order to recognise the unique contribution of freelancers within the sharing economy.
Seize the day
After four waves of societal pressures that originated from the 1960s, sustainability has finally penetrated the mainstream in 2015 following the launch of the UN’s Sustainable Development Goals, the COP21 Climate Change Conference, and the emergence of the fourth industrial revolution.
How can we harness the power within these trends to build tomorrow’s world?
As entrepreneurs, we can build tomorrow’s world by analysing our business models and operations, and assess whether we are fully capitalising the ‘socio-commercial’ opportunities of sustainability.
As consumers, we can build tomorrow’s world by realising small actions can chip away at larger problems. This includes not buying from retailers that do not reflect our values, finding out what banks do with our deposits, and questioning how and why certain products are made and priced the way they are. We all have a responsibility to consume sensibly and with knowledge, and the sooner we exercise our collective power as consumers, the faster we can all live in the world we want to live in.
The title of our discussion is ‘Will Tech Unicorns Save Our Planet’. Even though we have focused our discussion on technology companies, we mustn’t think saving our planet is the responsibility of any one person or a category of companies. Instead, we must realise all of us have the resources and the ability to save our planet, but only if we are bold enough to try.