From my perspective, for-profit entrepreneurship seems better than nonprofit entrepreneurship in terms of making an EA impact. The main reason is that the profit incentive gives you much broader access to capital, so it unlocks ideas that will only be impactful given enough money to get started. And I think there are a lot of ideas like this—it’s not hard to look at e.g. YC’s Requests for Startups and see obvious, huge-impact ideas that seem worth working on. (Linked from that page is another page about what YC looks for in a nonprofit, also a good read!)
I recommend that anyone wanting to start a company but not sure what to do, try looking at the Requests for Startups first and try to find something you have leverage on—but keep it small, your initial idea needs to start really “niche”, you won’t be able to solve a giant world problem from the get-go. Then read Paul Graham’s essays and Sam A’s startup playbook. Hopefully this literature will give you a better sense for whether entrepreneurship is for you. As you work on growing your business, don’t over-index on trying to make an EA impact early on—just focus on growth, like you would for any for-profit business. EA impact will come over time as you grow, and spending too much time worrying about the impact while you’re small is likely to be a distraction from growing as much as you can.
From my perspective, I wish more people would start software companies in Africa (presumably this is true for other places in the developing world). There’s a pretty wide appeal for lower-end tech optimized for consumers and businesses in these markets: low cost; Android-based; focused on mobile money.
(I also think nonprofit entrepreneurship is great in lots of ways, and in general I want to see people in EA putting energy behind all forms of innovation!)
All the above notwithstanding, it seems like it makes sense for EA orgs like 80000 hours not to spend much energy pushing people into for-profit entrepreneurship: there’s a model going around that the best entrepreneurs are driven enough that you don’t need to tell them to be an entrepreneur—it’s in their blood or something :). I am not myself too convinced this should be the blocker—I go around telling all my friends to start companies—but if that’s the working assumption, then they are probably acting correctly.
One final thought: If you rank EA ideas on a continuum from “produces no value” to “produces a ton of value,” it seems like the section of the continuum where nonprofit ideas are viable is quite small. Too low and your idea isn’t worth working on. But once you start producing lots of value for the world, stakeholders start to be willing to pay for the solution, and then you can start a for-profit company to do it. So from this perspective, the best EA nonprofit ideas are weird and non-central examples of value-producing ideas—they’re ideas that produce a lot of value but you can’t get anyone to pay for.
stakeholders start to be willing to pay for the solution
Under some ethical theories, the vast majority of stakeholders (nonhuman animals, future persons) are unable to pay in any meaningful sense. Are you more positive about nonprofit entrepreneurship for organizations that serve these stakeholders?
Fair question, and your comment elsewhere (about the narrow slice being the only slice that exists if the market is efficient) was enlightening.
However: my philosophy for startups is that I would nearly always take a different approach to solving these sorts of problems in the world. I would prefer to start Beyond Meat, and try to solve the nonhuman animals problem in an oblique way, instead of attacking it directly by starting a nonprofit. And I think a lot of entrepreneurs think like this as well: look at Elon Musk’s startup strategy—he tends to go for something which has a business/profitability angle from the first version, but with a big long-term mission (Tesla Roadster, early non-reusable SpaceX rockets). And as Ben writes elsewhere, I think the startup market is highly and obviously inefficient, so efficient market considerations are not very relevant.
Hmm. This argument seems like it only works if there are no market failures (i.e. ideas where it’s possible to capture a decent fraction of the value created), and it seems like most nonprofits address some sort of market failure? (e.g. “people do not understand the benefits of vitamin-fortified food,” “vaccination has strong positive externalities”...)
Yeah, that seems right to me, and is a good model that predicts the existing nonprofit startup ideas! My point is that it seems like a very narrow slice of all value-producing ideas.
To the extent that markets are efficient, that narrow slice is the only slice available (since the ways of creating value for which you can easily be paid have already been exploited).
(This is one reason why I personally am usually more excited about nonprofit startups: the low hanging fruit is usually picked in the for-profit world, but there’s a lot more remaining in the nonprofit space.)
Agree that if you put a lot of weight on the efficient market hypothesis, then starting a company looks bad and probably isn’t worth it. Personally, I don’t think markets are efficient enough for this to be a dominant consideration (see e.g. my response here for partial justification; not sure it’s possible to give a convincing full justification since it seems like a pretty deep worldview divergence between us and the more modest-epistemology-focused wing of the EA movement).
From my perspective, for-profit entrepreneurship seems better than nonprofit entrepreneurship in terms of making an EA impact. The main reason is that the profit incentive gives you much broader access to capital, so it unlocks ideas that will only be impactful given enough money to get started. And I think there are a lot of ideas like this—it’s not hard to look at e.g. YC’s Requests for Startups and see obvious, huge-impact ideas that seem worth working on. (Linked from that page is another page about what YC looks for in a nonprofit, also a good read!)
I recommend that anyone wanting to start a company but not sure what to do, try looking at the Requests for Startups first and try to find something you have leverage on—but keep it small, your initial idea needs to start really “niche”, you won’t be able to solve a giant world problem from the get-go. Then read Paul Graham’s essays and Sam A’s startup playbook. Hopefully this literature will give you a better sense for whether entrepreneurship is for you. As you work on growing your business, don’t over-index on trying to make an EA impact early on—just focus on growth, like you would for any for-profit business. EA impact will come over time as you grow, and spending too much time worrying about the impact while you’re small is likely to be a distraction from growing as much as you can.
From my perspective, I wish more people would start software companies in Africa (presumably this is true for other places in the developing world). There’s a pretty wide appeal for lower-end tech optimized for consumers and businesses in these markets: low cost; Android-based; focused on mobile money.
(I also think nonprofit entrepreneurship is great in lots of ways, and in general I want to see people in EA putting energy behind all forms of innovation!)
All the above notwithstanding, it seems like it makes sense for EA orgs like 80000 hours not to spend much energy pushing people into for-profit entrepreneurship: there’s a model going around that the best entrepreneurs are driven enough that you don’t need to tell them to be an entrepreneur—it’s in their blood or something :). I am not myself too convinced this should be the blocker—I go around telling all my friends to start companies—but if that’s the working assumption, then they are probably acting correctly.
One final thought: If you rank EA ideas on a continuum from “produces no value” to “produces a ton of value,” it seems like the section of the continuum where nonprofit ideas are viable is quite small. Too low and your idea isn’t worth working on. But once you start producing lots of value for the world, stakeholders start to be willing to pay for the solution, and then you can start a for-profit company to do it. So from this perspective, the best EA nonprofit ideas are weird and non-central examples of value-producing ideas—they’re ideas that produce a lot of value but you can’t get anyone to pay for.
Under some ethical theories, the vast majority of stakeholders (nonhuman animals, future persons) are unable to pay in any meaningful sense. Are you more positive about nonprofit entrepreneurship for organizations that serve these stakeholders?
Fair question, and your comment elsewhere (about the narrow slice being the only slice that exists if the market is efficient) was enlightening.
However: my philosophy for startups is that I would nearly always take a different approach to solving these sorts of problems in the world. I would prefer to start Beyond Meat, and try to solve the nonhuman animals problem in an oblique way, instead of attacking it directly by starting a nonprofit. And I think a lot of entrepreneurs think like this as well: look at Elon Musk’s startup strategy—he tends to go for something which has a business/profitability angle from the first version, but with a big long-term mission (Tesla Roadster, early non-reusable SpaceX rockets). And as Ben writes elsewhere, I think the startup market is highly and obviously inefficient, so efficient market considerations are not very relevant.
Thanks! Beyond Meat and SpaceX are great examples.
Hmm. This argument seems like it only works if there are no market failures (i.e. ideas where it’s possible to capture a decent fraction of the value created), and it seems like most nonprofits address some sort of market failure? (e.g. “people do not understand the benefits of vitamin-fortified food,” “vaccination has strong positive externalities”...)
Yeah, that seems right to me, and is a good model that predicts the existing nonprofit startup ideas! My point is that it seems like a very narrow slice of all value-producing ideas.
To the extent that markets are efficient, that narrow slice is the only slice available (since the ways of creating value for which you can easily be paid have already been exploited).
(This is one reason why I personally am usually more excited about nonprofit startups: the low hanging fruit is usually picked in the for-profit world, but there’s a lot more remaining in the nonprofit space.)
Agree that if you put a lot of weight on the efficient market hypothesis, then starting a company looks bad and probably isn’t worth it. Personally, I don’t think markets are efficient enough for this to be a dominant consideration (see e.g. my response here for partial justification; not sure it’s possible to give a convincing full justification since it seems like a pretty deep worldview divergence between us and the more modest-epistemology-focused wing of the EA movement).
That makes sense, thanks!