I was first exposed to the Conscious Capitalism movement years ago. As the founder of a green ad agency, I was impressed by both the purpose of Conscious Capitalism – to redefine the narrative between business and society – and the illustrious members who championed the movement.
Through Conscious Capitalism I met Jeff Cherry of Conscious Venture Lab. The Lab (and accompanying Conscious Venture Fund) were designed to incubate and accelerate companies that embraced a larger purpose for business.
In the world of startups, social and environmental purpose are becoming more the rule than the exception. In the near future, I believe it will be impossible for a startup to succeed without offering a strong benefit for the greater good.
However, that leaves startups pitching for investment in a conundrum – how much emphasis should be put on purpose, and how much on the viability of the big idea? Is it more important to state your mission for creating a better world, or your mission to create more customers?
With that dilemma in mind, I called Cherry for answers. What he looks for in a pitch is both refreshing, and comforting. You can click on the podcast below, or skip straight ahead to the highlights.
Hear the full Jeff Cherry interview here
It’s about discovering your purpose, not creating something new
According to Cherry, it’s more important for an early stage startup to know why it exists, than it is to demonstrate a technology that will change everything.
As he says, your idea will change and morph as the company evolves. The entire purpose of an incubator and mentors is to shape ideas so they create the greatest number of customers possible. The idea you launch is never the idea you started with.
Purpose, on the other hand, is something you can build your company around. It will inform the direction you take your idea, but also influence the people you surround yourself with, the community you want to help, and the values you espouse. It will be the north star you can navigate by.
Steering by the tenets of Conscious Capitalism
Cherry is a big believer in Simon Sinek’s concept of Starting With Why. However, I believe the four tenets of Conscious Capitalism might provide more fertile (and fresh) ground for framing your purpose in a pitch.
The tenets are:
- Purpose first,
- Servant leadership,
- Building conscious culture, and
- Managing for stakeholders.
Cherry was quick to point out that these pillars may seem at odds with Milton Friedman’s foundational statement that the only obligation of a company is to its shareholders. This, however, is a direct reflection on societal changes. In Friedman’s day, customers had a narrower definition of the good a product created, and the concept of societal good didn’t intersect with business. Today, a product that harms communities or the environment will no longer generate customers. No customers still means unhappy shareholders.
Don’t forget the business
Investors are as emotional and ‘gut’ driven as anyone else, but they need to see proof that an idea can work.
As Cherry pointed out, the traction you demonstrate doesn’t need to be earth-shattering. But it needs to generate a degree of comfort in your ability to solve a real problem for real people.
“Anyone who starts with ‘here’s what we do’ is guaranteed to bore us.” says Cherry. “But many social entrepreneurs seem to forget the business of their business completely – they’re engrossed in the social or environmental movement it supports.”
Simple, elegant ideas win
Cherry illustrated a common pitch downfall with an example. “I recall one entrepreneur who stood up in front of us and simply couldn’t believe we weren’t thrilled by his technology. It was beyond him that people wouldn’t flock to his shining brilliance – even if there was no business idea behind it.”
On the other hand, he fondly recalled one of his most successful investments. “This entrepreneur hadn’t been able to make one of our pitch sessions, but he called and begged for five minutes of my time. And five minutes was all it took him to convince me that his idea was simple, and elegant enough to be a big success.”
To Cherry, a simple idea coming from someone with a strong sense of environmental and social purpose is still going to win the day. And change the game.