I want to be careful with the criticism here since I generally want to appreciate people working hard on things they believe in but I want to recommend against people donating to this on any kind of cost-effectiveness grounds. Iâve followed and received investor updates (though I have never given them any money) to BOAS for maybe ~2 years now seeing their operations ~4 years and have also read up on the Profit-For-Good stuff.
You shouldnât expect PfG companies to be great vs. alternatives.
If you want to make an investment that gives capital to philanthropic causes every year to, in the words of PfG, create a philanthropic multiple, you can simply invest in the stock market or in bonds and give the profits/âdividends/âappreciation to charity. If you do this, less money goes to the charities in year 1 but you get this âsustained over timeâ. Similar things happen with endowments, certain trusts, etc. I donât see great evidence for any kind of special or magical
BOAS in particular doesnât seem like a great investment
BOAS has existed for several years now and, to put it bluntly, the numbers arenât great. Without the kind of philanthropic support it has received from seemingly non-economic actors, I think it would have died a while ago. This isnât to impune Vincent; most businesses fail and these types of consumer recycling marketplaces are just difficult and fail extremely frequently despite good intentions.
Any normal pitch for funding from a company this old would be showing a lot of metrics like monthly revenue, monthy net profit, etc. I think the fact that it isnât there is fairly telling.
Just donate directly or invest+donate
If BOAS isnât giving to your preferred cause areas, it obviously makes more sense to donate there directly. If Global Health is your preferred cause area, you should simply, donate there directly and/âor invest money and give away returns.
I still think Brad and Vincent are fighting, with valour, for an idea they believe in and I commend them for this but I just donât think this idea is working. When this is the case, itâs better that they get the sign âfrom the marketâ rather than continue to fund their project.
I appreciate you taking the time to write out a critique. I had to clarify and rectify some of what you wrote below.
But first, Iâm not going to go into your take on PFGâs not having a disadvantage, because a lot has been written on it, and a lot of data has been referenced there. For that I refer to the research on foundation-owned businesses, the success of Rolex, Bosch, Patagonia, Humanitix, ThankYou and other PFGâs, the talks of the PFG conference, and the reasoning for their success in the TEDx talks of Alex Amouyel, Brad West, myself and the writing of Peter Singer and The School for Moral Ambition on these subjects. You can also read my writing, as well as that of @Brad Westđ¸ on this forum about it. People can make up their own minds on benefits for PFGâs existing or not. I can only anecdotally share that I have had many benefits of being a PFG (I have written on that already), and only one clear disadvantage (the one that might kill this business): the lack of access to funding. Your comment reinforces that system, although you do it with the best intentions (wanting people to donate directly or ETG, which I believe perpetuates suboptimal systems). What I can say with certainty is that we would have not gotten the contract that is likely to make our company much larger and profitable next year (the 3.4M/âKG per year textile resale streams).
What is important is that the data and critique on my company is accurate. Iâm sure itâs unintentional, but there are some things that I need to clarify and rectify:
I do share monthly KPIâs in our investor newsletter (the one youâre getting), including the ones you mention. Any investor has full and transparent access to past performance and predicted performance. Anyone on here can request and get them immediately (vin@boas.co). Sharing monthlyâs here is going to be messy without tables. So sharing FY and estimate of this year here for 2023, 2024 and 2025 (expected). 2023 Revenue/âNet Profit 30K/â-47K. 2024 225K/â-151K. 2025 450K/â-170K. This post was written by Brad West, with my approval, and focuses on future performance. There was never any intention to hide past performance, nor do I think itâs as bad as you say:
Granted to you, we still burn 1 euro for each 3 euroâs we make, but this is quickly declining (we burnt 5 more euroâs per revenue euro 2 years ago), and our revenue has doubled in a year where focus wasnât on revenue growth (see below). I can share current costs and new contract costs, which cuts our biggest cost center (resale fashion buying) in half, so I can substantiate revenue increases and cost decreases with contracts and data. Please note that in the last 6 months our company burnt less than 50K and I expect our Q4 to be close to or break-even, and our two store are net profitable, so the burn is mostly going to overhead and the building of the hub.
This year was a bridge year, we built robotics (in a separate company because BOAS didnât get the necessary investment for it because itâs a PFG, but I did manage to pledge 90% of my shares to the BOAS foundation, currently valued by signed investors 1M, and most of that value is thanks to BOAS) and AI for faster and higher margin resale with BOAS, and we were securing large contracts (which we succeeded in). With the new contract (can be shared under NDA) we have access to 4-6x more clothing at half the price Iâm currently paying. Considering our stores are net profitable (again, happy to share numbers with investors) at the current 2X higher price, we have made it somewhat credible that this company will be significantly bigger and break even at the end of next year. Again, all of this is modeled extensively in financial forecasts, which were made by me (economics degree) and checked with dozens of professionals, as well as passing due diligence by investors, including a bank.
Our pitch deck obviously includes past financials, but cannot be shared without NDA because it contains information Iâm not allowed to share. I can share an anonymised version, but prefer to hop on a call with serious investors to show the actual contractors (since the contract is of demonstrably high value).
BOAS pivoted 2.5 years ago, and I do acknowledge I ran a sustainable marketplace before that (for 1.5 years, parttime next to a fulltime job with zero funding), which was a terribly bad idea. I think itâs fair to say that BOAS should be judged on the past 2.5 years, and I donât think our numbers offset to the investment received are bad, but I do agree they are not great either. I argue that with the contract, they will be significantly better.
Our investors include economic ones, and they include a bank. Obviously youâre going to get philanthropic/âfoundation funding if you donate 90% of profits, since you canât go to for profit investors, so the ânon-economic investorsâ isnât completely true.
Of course, BOAS would have surely died without investors, similar to our for-profit competition, who have raised and burnt (far) more money. Weâre trying to scale up fashion resale, which is very hard (I would argue impossible) to do without funding. Is there a problem to me asking for investment vs. my for-profit competition asking for investment?
We are not a recycling company. We are a clothing resale company. We agree recycling is a terrible business with high failure rates, although you should be aware of the EPR and ESPR regulations in the EU currently and quickly changing the recycling game for the better.
âIf BOAS isnât giving to your preferred cause areas, it obviously makes more sense to donate there directly. If Global Health is your preferred cause area, you should simply, donate there directly and/âor invest money and give away returns.â Investors can invest X% in BOAS and we can return the multiple of that investment in future donations to preferred cause areas (e.g. X% of the profits), as the post clearly states. We disagree on investing to give being more effective than PFG (see top of this comment for people to make up their own minds).
Ill reply to a few points. If there is one you feel is very strong you want me to address, let me know. Again, I want to say that I think you clearly have great intentions with BOAS and PFG.
I do share monthly KPIâs in our investor newsletter
Yes, I meant that usually a pitch like this would have this if numbers were great. I do have some of the investor updates you sent me and I wouldnât disclose them without permission but I had them in mind.
I think you should just post 2025 revenue/âgross profit/ânet profit to date. I guess a thing I have seen somewhat persistently is some rather large âexpectations of growthâ that are called conservative but frankly, arenât at all. From the OP,
10-year cumulative: âŹ10M+ to EA causes + 195,000 tCOâe avoided
From one âŹ232k grant.
This type of thing is often presented as âhappeningâ when itâs more like you hope it to happen.
People can make up their own minds on benefits for PFGâs existing or not. I can only anecdotally share that I have had many benefits of being a PFG.
I worry that this is going to come off a bit too negative but, I agree. Many people who wouldnât invest in this under normal circumstances are going to because it feels like a good cause and arenât looking at it as rigorously.
I donât feel very strong about any of your points, I just want our business and numbers reflected accurately. To your points:
Brad wrote the post, he didnât have clear access to my numbers. Again, the pitch has the numbers, and happy to have Brad add them to the post (but donât think it matters since I posted them in the comments).
2025 actuals Jan-Sep: 324K/â-177K. Important to note than in retail Q4 usually amounts to 30-45% of yearly revenue instead of 25%. I wonât see such strong revenue growth because we lack funding, but the 450K quoted earlier is likely too conservative. Flat extrapolation would put us at 440K, and I have bigger stores, Q4 holiday season and some B2B deals just closed.
You are absolutely right that startups and non-profits present things as happening. I also agree itâs put too optimistic. Our financial models use market standard discounted cash flows to account for risks, and this remains a high-EV case.
In our latest bridge round (estimated 2025 financials in 2024, but closed april 2025) we raised 100K instead of the required 200K and weâre ending at 440-500K instead of the promised 580K revenue for 2025. Iâm not sure how we would have performed with the actually needed capital, but currently weâre making 4-5 euroâs of revenue for each euro burned, so it seems realistic that my forecast was realistic.
I donât want people to invest in BOAS without looking at it rigurously, because even with very large discounts (higher than market discount rates), BOAS has a higher EV than donating to give (feel free to adjust the mistakes in Patrick Grubans EV model, discount even more, add continuing values (or not if you somehow argue that you shouldnât do that), and check for yourself). Iâm still missing good economic points on why this couldnât be an interesting but risky investment for future donations.
I will park this discussion from my end, Iâve made my points (people can dismiss them, more than fine with that) and I have funding to raise for a PFG, which is hard enough with accurate data and portrayals of our company. I encourage everyone to request our actual numbers, contracts and letters of intent, and our different financial models (base, worst, minimum funding cases), and come and jump on a call with me. I wish you and EAIF had done the same before dismissing it.
Thanks for following BOAS, and I hope to prove you wrong in the future.
I appreciate your concern for the effective use of philanthropic funds. And I would be remiss if I did not take pause when the previous #1 trader on Manifold and a generally successful investor disagrees with me. But brilliant people have been fantastically wrong on some things historically, and I think youâve missed the mark regarding your assessment of Profit for Good.
First, regarding your BOAS claims, I will leave Vin to address that, if he elects to do so.
Your comments regarding Profit for Good generally do not engage with the arguments we have made. As youâve indicated, a perpetual stream of funds can be unlocked through an index fund or a sufficiently diversified set of assets. This is not what we mean by a philanthropic multiplier. We assert that, in expectation, a set of PFG equities should outperform an index fund.
According to our theory, the reason for this outperformance is because the stakeholders whose activities are relevant in business performance have a nonzero preference for the charitable cause. That is to say, if all else is equal (same price, same quality, same convenience and other relevant factors), people would rather money go toward saving a kid from malaria than enriching a random investor. This theory would apply not just to potential buyers of the product, but to other stakeholders such as potential employees, media, suppliers, and government. And unlike other forms of business, ownership of a business by a charity or charitable foundation does not necessarily negatively affect operations whatsoever. So while other forms of social enterprise often entail costs that make them less competitive (i.e., fair trade coffee costs increased supply costs to consumers), there is no inherent operational disadvantage to being owned by a foundation (indeed, in our current economy, most stock ownership of mid to large size businesses is passive).
So, the financial case for a PFG is that of operational parity (or no structural disadvantage) in conjunction with an advantage from stakeholder preference. I would emphasize that I have never contended that this stakeholder preference is large in all contexts. In fact, research shows that, by and large, people are not willing to pay significant premiums for ethical products (hence Fair Tradeâs market cap). But where people do not have to pay premiums or otherwise sacrifice for ethical products, adoption happens quickly. Because PFGs method of doing good is through ownership rather than through operations, there is no structural reason they cannot offer relative parity of choice.
You might be interested to know that I have been working on a research compilation to support this thesis over the past several months. I have researched behavioral and reported preferences across a variety of stakeholder categories (consumers, employees, media, suppliers, procurers, governments, etc.). I have also researched PFG performance across the limited span of them that exist. I have researched product adoption patterns and the relationship between product adoption and price/âquality parity, and other matters.
The research supports the common sense assertion that people prefer buying in an ethical way when it doesnât cost them any more. That employees would rather their work have a purpose and are often willing to accept slightly lower pay to have a job full of meaning (also, much lower turnover). That media happily amplifies the stories of businesses that work for charitable rather than shareholder enrichment, enabling greater reach with lower advertising spend. That governments put socially beneficial businesses, of which Profit for Good businesses generally qualify, in privileged positions when considering contracts.
And these advantages compound. When Humanitix saves significant labor costs because of industry-leading labor retention, it can pass on savings and charge less. Similarly, it can save money on marketing spend when Sam Harris endorses them on his podcast. When you add the stakeholder advantages across the categories, it is the ingredient for capturing market share from competitors who cannot replicate it.
I hope to have the compilation complete in the next few weeks, though I canât make any promises. I will be using it in the book I am drafting on Profit for Good as a promising tool philanthropists could use to better the world.
I donât really know what our cruxes are, Marcus. I suspect that it has to do with the degree of stakeholder preference (I think you put it at zero, and I think itâs generally positive and the degree of which significantly differs depending on context). I anticipate you saying that it is drowned out by other factors and I would agree that other factors are more important. But there is no reason that the balance of other factors would incline toward non-PFGs rather than PFGs and it is smart to play with a coin that is even slightly weighted toward you. And further, I think that intelligent consideration of where stakeholder preferences could make the biggest difference will make the compound advantages much more compelling than a slightly weighted coin.
You say that we should get the âsign from the marketâ, but this is not a market that philanthropists have historically participated in. Historically, theyâve separated their business holdings from their philanthropic activity. Where there has been external investment in PFG, such as with Humanitix by the Atlassian Foundation, for instance, it has paid off magnificently. Thankyou, a PFG in Australia has been a category leader. When it tried to get capital to expand, it could have got it from private investors in exchange for significant equity in exchange, but philanthropists did not want to take advantage of this opportunity. The Profit for Good game is just one that philanthropists has not been playing and no one has been measuring stakeholder preferences and performance implications.
It isnât that âthis has been tried and the market has spokenâ. It has, generally, not been tried. Which is a damn shame given what it could do if we are right and you are wrong.
Hi Brad, appreciate the praise though itâs unnecessary :). Iâll reply to your points here. If there are some others you particularly want me to address, feel free to let me know.
We assert that, in expectation, a set of PFG equities should outperform an index fund.
I donât think this has been shown. For example, the largest and most profitable companies in existence are normal for-profit companies.
That is to say, if all else is equal (same price, same quality, same convenience and other relevant factors), people would rather money go toward saving a kid from malaria than enriching a random investor.
Maybe, though I havenât seen much/âany evidence for this and I think things are very rarely ever equal like this.
In the next bit, you give several anecdotes. I think those are very easy to give. You probably donât show the failures (most of which you probably donât know of!) and I could give you millions of anecdotes about the free advertising, preferential treatment, etc. of other businesses. I agree, people wish the world were more charitable, but they donât want to pay for that.
Actually, I think there is a real-world example where what you are hoping for didnât happen, Glo dollar. Theyâve been around for a while with a current Mcap of ~3M circulating, which is basically nothing (they canât even cover operating costs). Stablecoins are as close as one gets to a commodity/âundifferentiated good, where, according to my understanding of PfG theory, they should have been able to dominate the market. The best talent should have flocked to develop Glo dollar. Stablecoin holders should have been more than happy to hold Glo dollars instead of USDC/âUSDT, since itâs just a change of who gets the interest from treasuries. There should have been several compounding advantages and such.
I suppose my overall point about PfG would be that we should basically invest in good companies insofar as our discount rate is less than our expected returns, and we should seek to invest in good companies that will maximize our (risk-adjusted) returns. Focusing on so-called PfG companies will cause us to deviate from good investment strategies because people are going to see imaginary gains.
As a thought, why do we need to âstart new companiesâ with this strategy, why canât we just buy up the stock of a random public company and then tell people, âyou will further our philanthropic goals if you choose company A over company B since philanthropic holders own company A stockâ?
@Marcus Abramovitch đ¸ we should absolutely do what you say in your last paragraph, and we also call that PFG. We just have to make sure this is locked in governance (e.g. foundation owned, steward-ownership). I would love to buy existing businesses and turn them PFG, or invest more in existing PFGâs (e.g. I think a philanthropist should give Humanitix dozens of millions to try and dominate the American ticketing market).
Thereâs pretty good evidence on foundation-owned businesses outperforming their competitors (I donât want to seem like I will pick and choose evidence, so start by looking at peer-reviewed data on foundation owned businesses yourself). Thatâs somewhat amazing considering PFGâs are mostly not allowed to exist, so I didnât expect this evidence to even be able to exist. Philanthropists and investors have always deprived PFGâs of necessary capital, sometimes intentional, but often unintentional. That Rolex, Bosch, Newmanâs Own, Carl Zeiss, Patagonia, AFAS, Rituals and Humanitix have all outperformed in their industries is a very encouraging sign. Itâs a shame itâs so far missed by philanthropists. I invite everyone to find as much evidence against PFGâs as possible, and I agree Glo hasnât been able to be successful.
I agree and would encourage potential investors to take into consideration base rates of startups reaching âŹ1M+ on profits yearly when comparing this to other forms of investments. I spent 5 min prompting Claude to come up with a BOTEC based on this post, which I havenât checked but could be an entry point to additional research.
Interestingly, Claudeâs numbers would actually suggest that BOAS is a higher EV decision (for some reason, it appears to double-count the risk; I.e., it took the EV which takes 60% failure into account and multiplied it again by 0.4).
Not that anyone here should (or would) make these decisions based on unchecked Claude BOTECs anyway; just found it to be an interesting flaw.
In addition to the previously mentioned mistakes, from an economist perspective it would be more accurate to use a âcontinuing valueâ after using a âdiscounted cash flowâ for post 2029 profits, adding the lifetime of average foundation owned businesses. This would likely change results (possibly dramatically) while making them more accurate. Your BOTEC stops when BOAS reaches higher profitability in 2029, which is when most of the impact is just starting.
Again, this should be discounted for the risk, which your model has done (accidentally twice, which needs to be adjusted).
@Patrick Gruban đ¸ could you run the model with continuing values for stock market and BOAS, and remove double risk counting? I can check the BOTEC after to make sure itâs actually accurate.
My short Claude prompt was only intended as a conversation starter, so Iâm happy this worked. Iâm not considering investing, but if potential investors would like to carry this on and share here, this might be useful.
There is a mistake in this analysis, but Iâm happy that by removing the mistakes we come out as a clear winner. - Double accounts for risk (in expected value, and then it applies risk again on the expected value, which already included an 80-90% risk/âfailure rate) - Your analysis gives zero weight to the social cost of carbon and social return on investment, which in conservative scenarios return additional millions to society in our case, and in most stock market cases would have costs instead of benefits - We are not a consumer marketplace, and we are not in recycling
I want to be careful with the criticism here since I generally want to appreciate people working hard on things they believe in but I want to recommend against people donating to this on any kind of cost-effectiveness grounds. Iâve followed and received investor updates (though I have never given them any money) to BOAS for maybe ~2 years now seeing their operations ~4 years and have also read up on the Profit-For-Good stuff.
You shouldnât expect PfG companies to be great vs. alternatives.
If you want to make an investment that gives capital to philanthropic causes every year to, in the words of PfG, create a philanthropic multiple, you can simply invest in the stock market or in bonds and give the profits/âdividends/âappreciation to charity. If you do this, less money goes to the charities in year 1 but you get this âsustained over timeâ. Similar things happen with endowments, certain trusts, etc. I donât see great evidence for any kind of special or magical
BOAS in particular doesnât seem like a great investment
BOAS has existed for several years now and, to put it bluntly, the numbers arenât great. Without the kind of philanthropic support it has received from seemingly non-economic actors, I think it would have died a while ago. This isnât to impune Vincent; most businesses fail and these types of consumer recycling marketplaces are just difficult and fail extremely frequently despite good intentions.
Any normal pitch for funding from a company this old would be showing a lot of metrics like monthly revenue, monthy net profit, etc. I think the fact that it isnât there is fairly telling.
Just donate directly or invest+donate
If BOAS isnât giving to your preferred cause areas, it obviously makes more sense to donate there directly. If Global Health is your preferred cause area, you should simply, donate there directly and/âor invest money and give away returns.
I still think Brad and Vincent are fighting, with valour, for an idea they believe in and I commend them for this but I just donât think this idea is working. When this is the case, itâs better that they get the sign âfrom the marketâ rather than continue to fund their project.
Hi Marcus,
I appreciate you taking the time to write out a critique. I had to clarify and rectify some of what you wrote below.
But first, Iâm not going to go into your take on PFGâs not having a disadvantage, because a lot has been written on it, and a lot of data has been referenced there. For that I refer to the research on foundation-owned businesses, the success of Rolex, Bosch, Patagonia, Humanitix, ThankYou and other PFGâs, the talks of the PFG conference, and the reasoning for their success in the TEDx talks of Alex Amouyel, Brad West, myself and the writing of Peter Singer and The School for Moral Ambition on these subjects. You can also read my writing, as well as that of @Brad Westđ¸ on this forum about it. People can make up their own minds on benefits for PFGâs existing or not. I can only anecdotally share that I have had many benefits of being a PFG (I have written on that already), and only one clear disadvantage (the one that might kill this business): the lack of access to funding. Your comment reinforces that system, although you do it with the best intentions (wanting people to donate directly or ETG, which I believe perpetuates suboptimal systems). What I can say with certainty is that we would have not gotten the contract that is likely to make our company much larger and profitable next year (the 3.4M/âKG per year textile resale streams).
What is important is that the data and critique on my company is accurate. Iâm sure itâs unintentional, but there are some things that I need to clarify and rectify:
I do share monthly KPIâs in our investor newsletter (the one youâre getting), including the ones you mention. Any investor has full and transparent access to past performance and predicted performance. Anyone on here can request and get them immediately (vin@boas.co). Sharing monthlyâs here is going to be messy without tables. So sharing FY and estimate of this year here for 2023, 2024 and 2025 (expected). 2023 Revenue/âNet Profit 30K/â-47K. 2024 225K/â-151K. 2025 450K/â-170K. This post was written by Brad West, with my approval, and focuses on future performance. There was never any intention to hide past performance, nor do I think itâs as bad as you say:
Granted to you, we still burn 1 euro for each 3 euroâs we make, but this is quickly declining (we burnt 5 more euroâs per revenue euro 2 years ago), and our revenue has doubled in a year where focus wasnât on revenue growth (see below). I can share current costs and new contract costs, which cuts our biggest cost center (resale fashion buying) in half, so I can substantiate revenue increases and cost decreases with contracts and data. Please note that in the last 6 months our company burnt less than 50K and I expect our Q4 to be close to or break-even, and our two store are net profitable, so the burn is mostly going to overhead and the building of the hub.
This year was a bridge year, we built robotics (in a separate company because BOAS didnât get the necessary investment for it because itâs a PFG, but I did manage to pledge 90% of my shares to the BOAS foundation, currently valued by signed investors 1M, and most of that value is thanks to BOAS) and AI for faster and higher margin resale with BOAS, and we were securing large contracts (which we succeeded in). With the new contract (can be shared under NDA) we have access to 4-6x more clothing at half the price Iâm currently paying. Considering our stores are net profitable (again, happy to share numbers with investors) at the current 2X higher price, we have made it somewhat credible that this company will be significantly bigger and break even at the end of next year. Again, all of this is modeled extensively in financial forecasts, which were made by me (economics degree) and checked with dozens of professionals, as well as passing due diligence by investors, including a bank.
Our pitch deck obviously includes past financials, but cannot be shared without NDA because it contains information Iâm not allowed to share. I can share an anonymised version, but prefer to hop on a call with serious investors to show the actual contractors (since the contract is of demonstrably high value).
BOAS pivoted 2.5 years ago, and I do acknowledge I ran a sustainable marketplace before that (for 1.5 years, parttime next to a fulltime job with zero funding), which was a terribly bad idea. I think itâs fair to say that BOAS should be judged on the past 2.5 years, and I donât think our numbers offset to the investment received are bad, but I do agree they are not great either. I argue that with the contract, they will be significantly better.
Our investors include economic ones, and they include a bank. Obviously youâre going to get philanthropic/âfoundation funding if you donate 90% of profits, since you canât go to for profit investors, so the ânon-economic investorsâ isnât completely true.
Of course, BOAS would have surely died without investors, similar to our for-profit competition, who have raised and burnt (far) more money. Weâre trying to scale up fashion resale, which is very hard (I would argue impossible) to do without funding. Is there a problem to me asking for investment vs. my for-profit competition asking for investment?
We are not a recycling company. We are a clothing resale company. We agree recycling is a terrible business with high failure rates, although you should be aware of the EPR and ESPR regulations in the EU currently and quickly changing the recycling game for the better.
âIf BOAS isnât giving to your preferred cause areas, it obviously makes more sense to donate there directly. If Global Health is your preferred cause area, you should simply, donate there directly and/âor invest money and give away returns.â Investors can invest X% in BOAS and we can return the multiple of that investment in future donations to preferred cause areas (e.g. X% of the profits), as the post clearly states. We disagree on investing to give being more effective than PFG (see top of this comment for people to make up their own minds).
Ill reply to a few points. If there is one you feel is very strong you want me to address, let me know. Again, I want to say that I think you clearly have great intentions with BOAS and PFG.
Yes, I meant that usually a pitch like this would have this if numbers were great. I do have some of the investor updates you sent me and I wouldnât disclose them without permission but I had them in mind.
I think you should just post 2025 revenue/âgross profit/ânet profit to date. I guess a thing I have seen somewhat persistently is some rather large âexpectations of growthâ that are called conservative but frankly, arenât at all. From the OP,
This type of thing is often presented as âhappeningâ when itâs more like you hope it to happen.
I worry that this is going to come off a bit too negative but, I agree. Many people who wouldnât invest in this under normal circumstances are going to because it feels like a good cause and arenât looking at it as rigorously.
I donât feel very strong about any of your points, I just want our business and numbers reflected accurately. To your points:
Brad wrote the post, he didnât have clear access to my numbers. Again, the pitch has the numbers, and happy to have Brad add them to the post (but donât think it matters since I posted them in the comments).
2025 actuals Jan-Sep: 324K/â-177K. Important to note than in retail Q4 usually amounts to 30-45% of yearly revenue instead of 25%. I wonât see such strong revenue growth because we lack funding, but the 450K quoted earlier is likely too conservative. Flat extrapolation would put us at 440K, and I have bigger stores, Q4 holiday season and some B2B deals just closed.
You are absolutely right that startups and non-profits present things as happening. I also agree itâs put too optimistic. Our financial models use market standard discounted cash flows to account for risks, and this remains a high-EV case.
In our latest bridge round (estimated 2025 financials in 2024, but closed april 2025) we raised 100K instead of the required 200K and weâre ending at 440-500K instead of the promised 580K revenue for 2025. Iâm not sure how we would have performed with the actually needed capital, but currently weâre making 4-5 euroâs of revenue for each euro burned, so it seems realistic that my forecast was realistic.
I donât want people to invest in BOAS without looking at it rigurously, because even with very large discounts (higher than market discount rates), BOAS has a higher EV than donating to give (feel free to adjust the mistakes in Patrick Grubans EV model, discount even more, add continuing values (or not if you somehow argue that you shouldnât do that), and check for yourself). Iâm still missing good economic points on why this couldnât be an interesting but risky investment for future donations.
I will park this discussion from my end, Iâve made my points (people can dismiss them, more than fine with that) and I have funding to raise for a PFG, which is hard enough with accurate data and portrayals of our company. I encourage everyone to request our actual numbers, contracts and letters of intent, and our different financial models (base, worst, minimum funding cases), and come and jump on a call with me. I wish you and EAIF had done the same before dismissing it.
Thanks for following BOAS, and I hope to prove you wrong in the future.
Marcus,
I appreciate your concern for the effective use of philanthropic funds. And I would be remiss if I did not take pause when the previous #1 trader on Manifold and a generally successful investor disagrees with me. But brilliant people have been fantastically wrong on some things historically, and I think youâve missed the mark regarding your assessment of Profit for Good.
First, regarding your BOAS claims, I will leave Vin to address that, if he elects to do so.
Your comments regarding Profit for Good generally do not engage with the arguments we have made. As youâve indicated, a perpetual stream of funds can be unlocked through an index fund or a sufficiently diversified set of assets. This is not what we mean by a philanthropic multiplier. We assert that, in expectation, a set of PFG equities should outperform an index fund.
According to our theory, the reason for this outperformance is because the stakeholders whose activities are relevant in business performance have a nonzero preference for the charitable cause. That is to say, if all else is equal (same price, same quality, same convenience and other relevant factors), people would rather money go toward saving a kid from malaria than enriching a random investor. This theory would apply not just to potential buyers of the product, but to other stakeholders such as potential employees, media, suppliers, and government. And unlike other forms of business, ownership of a business by a charity or charitable foundation does not necessarily negatively affect operations whatsoever. So while other forms of social enterprise often entail costs that make them less competitive (i.e., fair trade coffee costs increased supply costs to consumers), there is no inherent operational disadvantage to being owned by a foundation (indeed, in our current economy, most stock ownership of mid to large size businesses is passive).
So, the financial case for a PFG is that of operational parity (or no structural disadvantage) in conjunction with an advantage from stakeholder preference. I would emphasize that I have never contended that this stakeholder preference is large in all contexts. In fact, research shows that, by and large, people are not willing to pay significant premiums for ethical products (hence Fair Tradeâs market cap). But where people do not have to pay premiums or otherwise sacrifice for ethical products, adoption happens quickly. Because PFGs method of doing good is through ownership rather than through operations, there is no structural reason they cannot offer relative parity of choice.
You might be interested to know that I have been working on a research compilation to support this thesis over the past several months. I have researched behavioral and reported preferences across a variety of stakeholder categories (consumers, employees, media, suppliers, procurers, governments, etc.). I have also researched PFG performance across the limited span of them that exist. I have researched product adoption patterns and the relationship between product adoption and price/âquality parity, and other matters.
The research supports the common sense assertion that people prefer buying in an ethical way when it doesnât cost them any more. That employees would rather their work have a purpose and are often willing to accept slightly lower pay to have a job full of meaning (also, much lower turnover). That media happily amplifies the stories of businesses that work for charitable rather than shareholder enrichment, enabling greater reach with lower advertising spend. That governments put socially beneficial businesses, of which Profit for Good businesses generally qualify, in privileged positions when considering contracts.
And these advantages compound. When Humanitix saves significant labor costs because of industry-leading labor retention, it can pass on savings and charge less. Similarly, it can save money on marketing spend when Sam Harris endorses them on his podcast. When you add the stakeholder advantages across the categories, it is the ingredient for capturing market share from competitors who cannot replicate it.
I hope to have the compilation complete in the next few weeks, though I canât make any promises. I will be using it in the book I am drafting on Profit for Good as a promising tool philanthropists could use to better the world.
I donât really know what our cruxes are, Marcus. I suspect that it has to do with the degree of stakeholder preference (I think you put it at zero, and I think itâs generally positive and the degree of which significantly differs depending on context). I anticipate you saying that it is drowned out by other factors and I would agree that other factors are more important. But there is no reason that the balance of other factors would incline toward non-PFGs rather than PFGs and it is smart to play with a coin that is even slightly weighted toward you. And further, I think that intelligent consideration of where stakeholder preferences could make the biggest difference will make the compound advantages much more compelling than a slightly weighted coin.
You say that we should get the âsign from the marketâ, but this is not a market that philanthropists have historically participated in. Historically, theyâve separated their business holdings from their philanthropic activity. Where there has been external investment in PFG, such as with Humanitix by the Atlassian Foundation, for instance, it has paid off magnificently. Thankyou, a PFG in Australia has been a category leader. When it tried to get capital to expand, it could have got it from private investors in exchange for significant equity in exchange, but philanthropists did not want to take advantage of this opportunity. The Profit for Good game is just one that philanthropists has not been playing and no one has been measuring stakeholder preferences and performance implications.
It isnât that âthis has been tried and the market has spokenâ. It has, generally, not been tried. Which is a damn shame given what it could do if we are right and you are wrong.
Hi Brad, appreciate the praise though itâs unnecessary :). Iâll reply to your points here. If there are some others you particularly want me to address, feel free to let me know.
I donât think this has been shown. For example, the largest and most profitable companies in existence are normal for-profit companies.
Maybe, though I havenât seen much/âany evidence for this and I think things are very rarely ever equal like this.
In the next bit, you give several anecdotes. I think those are very easy to give. You probably donât show the failures (most of which you probably donât know of!) and I could give you millions of anecdotes about the free advertising, preferential treatment, etc. of other businesses. I agree, people wish the world were more charitable, but they donât want to pay for that.
Actually, I think there is a real-world example where what you are hoping for didnât happen, Glo dollar. Theyâve been around for a while with a current Mcap of ~3M circulating, which is basically nothing (they canât even cover operating costs). Stablecoins are as close as one gets to a commodity/âundifferentiated good, where, according to my understanding of PfG theory, they should have been able to dominate the market. The best talent should have flocked to develop Glo dollar. Stablecoin holders should have been more than happy to hold Glo dollars instead of USDC/âUSDT, since itâs just a change of who gets the interest from treasuries. There should have been several compounding advantages and such.
I suppose my overall point about PfG would be that we should basically invest in good companies insofar as our discount rate is less than our expected returns, and we should seek to invest in good companies that will maximize our (risk-adjusted) returns. Focusing on so-called PfG companies will cause us to deviate from good investment strategies because people are going to see imaginary gains.
As a thought, why do we need to âstart new companiesâ with this strategy, why canât we just buy up the stock of a random public company and then tell people, âyou will further our philanthropic goals if you choose company A over company B since philanthropic holders own company A stockâ?
@Marcus Abramovitch đ¸ we should absolutely do what you say in your last paragraph, and we also call that PFG. We just have to make sure this is locked in governance (e.g. foundation owned, steward-ownership). I would love to buy existing businesses and turn them PFG, or invest more in existing PFGâs (e.g. I think a philanthropist should give Humanitix dozens of millions to try and dominate the American ticketing market).
Thereâs pretty good evidence on foundation-owned businesses outperforming their competitors (I donât want to seem like I will pick and choose evidence, so start by looking at peer-reviewed data on foundation owned businesses yourself). Thatâs somewhat amazing considering PFGâs are mostly not allowed to exist, so I didnât expect this evidence to even be able to exist. Philanthropists and investors have always deprived PFGâs of necessary capital, sometimes intentional, but often unintentional. That Rolex, Bosch, Newmanâs Own, Carl Zeiss, Patagonia, AFAS, Rituals and Humanitix have all outperformed in their industries is a very encouraging sign. Itâs a shame itâs so far missed by philanthropists. I invite everyone to find as much evidence against PFGâs as possible, and I agree Glo hasnât been able to be successful.
I agree and would encourage potential investors to take into consideration base rates of startups reaching âŹ1M+ on profits yearly when comparing this to other forms of investments. I spent 5 min prompting Claude to come up with a BOTEC based on this post, which I havenât checked but could be an entry point to additional research.
Interestingly, Claudeâs numbers would actually suggest that BOAS is a higher EV decision (for some reason, it appears to double-count the risk; I.e., it took the EV which takes 60% failure into account and multiplied it again by 0.4).
Not that anyone here should (or would) make these decisions based on unchecked Claude BOTECs anyway; just found it to be an interesting flaw.
@Kevin Xia đ¸ thanks for pointing out the mistake too.
In addition to the previously mentioned mistakes, from an economist perspective it would be more accurate to use a âcontinuing valueâ after using a âdiscounted cash flowâ for post 2029 profits, adding the lifetime of average foundation owned businesses. This would likely change results (possibly dramatically) while making them more accurate. Your BOTEC stops when BOAS reaches higher profitability in 2029, which is when most of the impact is just starting.
Again, this should be discounted for the risk, which your model has done (accidentally twice, which needs to be adjusted).
@Patrick Gruban đ¸ could you run the model with continuing values for stock market and BOAS, and remove double risk counting? I can check the BOTEC after to make sure itâs actually accurate.
My short Claude prompt was only intended as a conversation starter, so Iâm happy this worked. Iâm not considering investing, but if potential investors would like to carry this on and share here, this might be useful.
There is a mistake in this analysis, but Iâm happy that by removing the mistakes we come out as a clear winner.
- Double accounts for risk (in expected value, and then it applies risk again on the expected value, which already included an 80-90% risk/âfailure rate)
- Your analysis gives zero weight to the social cost of carbon and social return on investment, which in conservative scenarios return additional millions to society in our case, and in most stock market cases would have costs instead of benefits
- We are not a consumer marketplace, and we are not in recycling
Could you adjust for the mistake please?