How to Create a Business That Is Sustainable for the Planet and Profitable at the Same Time.
For startups looking to contribute to the well-being of the world, balancing social impact with profitability can prove to be a complicated challenge.
Startups aiming to improve the world face the challenge of balancing social impact with profitability. Allison Wolff, co-founder and CEO of Vibrant Planet, commented on the Builders stage at TechCrunch Disrupt 2024 that there is a misalignment between investor expectations and the difficult issues society faces. However, she also emphasized that it is not an impossible task. Her company has created cloud-based software aimed at utilities, insurers, and land managers, such as the U.S. Forest Service, to model and manage wildfire risk. To maintain its focus on the mission, Vibrant Planet has registered as a public benefit corporation, which requires them to report on their impact in addition to the usual financial results. Wolff suggested that this structure is an elegant option to consider and that converting to this model is quite straightforward. This reporting obligation motivates the company to reflect annually on its impact and how to account for it.
On the other hand, Areeb Malik, co-founder of Glacier, a company dedicated to robotic recycling, mentioned that his team has sought a business model that unites social goals and profitability. Malik explained that when starting his company, his priority was to find opportunities that aligned climate impact, his passion, with revenue generation. He would accept the input of a private equity fund into his business, as those resources directly correlate with environmental impact.
However, Hyuk-Jeen Suh, general partner at SkyRiver Ventures, warned that maintaining the mission is not enough if a company fails to expand its impact. According to him, many founders focus so much on their product that they neglect to build a foundation for scaling. It is crucial that when developing a product, consideration is given to how it will be produced and marketed at scale. Despite the complexity this may represent for startups, Suh argues that this ambition is a sign they are heading in the right direction. He suggested that having a bold vision is essential, as without it, it will be difficult to achieve significant impact.
