Disclaimer: I sometimes work with Brad and I founded a PFG so I am biased towards thinking PFG’s can work.
There’s some more red teaming in the comments of a quick take I did about the fundraising round that the PFG I founded is going through. That’s here.
We also did a red teaming session on Profit for Good at EAGxRotterdam. This was filmed but unfortunately never released (I think the video person literally said they lost the recording :/).
Generally the biggest reasons against Profit for Good, based on my experience of founding one called BOAS: - Raising capital is (at least currently) harder. It’s hard for me to put a number on it but I’d say it’s at least 3 times less likely you’ll receive funding. - You will raise less capital and slower than the competition so they might outcompete. - Legal issues. Depending on the country there’s not set company structure for this. - Lack of capital means you cannot retain talent (based on my experience getting talent is easier as a PFG) as easily as having deep venture capital funded pockets. - Lack of understanding of stakeholders: generally a lot of people assume PFG’s cannot scale because they donate profits. It’s important people understand PFG’s can reinvest profits just like regular for-profits. - Status quo bias: just because people think it hasn’t been done (it has, but people don’t generally know that) they assume it cannot be done, even when presented with arguments (e.g. the successful PFG’s already out there and the research on them). - Some people argue that people are selfish and founders start companies to get rich, so they wouldn’t want to start/run PFG’s. Based on our founder pipeline it suggests the opposite. It was full of people who could make more money doing less work, and many applied because we were a PFG, not in spite of.
Disclaimer: I sometimes work with Brad and I founded a PFG so I am biased towards thinking PFG’s can work.
There’s some more red teaming in the comments of a quick take I did about the fundraising round that the PFG I founded is going through. That’s here.
We also did a red teaming session on Profit for Good at EAGxRotterdam. This was filmed but unfortunately never released (I think the video person literally said they lost the recording :/).
Generally the biggest reasons against Profit for Good, based on my experience of founding one called BOAS:
- Raising capital is (at least currently) harder. It’s hard for me to put a number on it but I’d say it’s at least 3 times less likely you’ll receive funding.
- You will raise less capital and slower than the competition so they might outcompete.
- Legal issues. Depending on the country there’s not set company structure for this.
- Lack of capital means you cannot retain talent (based on my experience getting talent is easier as a PFG) as easily as having deep venture capital funded pockets.
- Lack of understanding of stakeholders: generally a lot of people assume PFG’s cannot scale because they donate profits. It’s important people understand PFG’s can reinvest profits just like regular for-profits.
- Status quo bias: just because people think it hasn’t been done (it has, but people don’t generally know that) they assume it cannot be done, even when presented with arguments (e.g. the successful PFG’s already out there and the research on them).
- Some people argue that people are selfish and founders start companies to get rich, so they wouldn’t want to start/run PFG’s. Based on our founder pipeline it suggests the opposite. It was full of people who could make more money doing less work, and many applied because we were a PFG, not in spite of.
Please note that the arguments from the quick take are in the document under appropriate headings.
I just saw they are. For those interested, I provided comments to the red teaming working document.