With Elon Musk making headlines for trillion-dollar Tesla, isn’t it time for a new definition of the unicorn? Not in dollar valuation terms, but in social impact. A social unicorn.
While the allure of building a billion-dollar company still endures, especially in technology, there are strong indications that a new kind of unicorn really is being born. Venture capitalists might be on the hunt for 10x revenue, but what about 10x social or environmental impact?
There’s the growing success of purpose-driven business models such as Who Gives a Crap, which provides a sustainable product to customers and donates 50% of its profits to charity. There’s also successful companies such as Canva that are doubling down on corporate social responsibility, including a net-zero commitment and its founders putting much of their personal wealth towards philanthropic purposes.
At the same time, the shortcomings of the traditional for-profit business model are on full display in the tech sector. There’s Facebook’s leaked documents that reveal executives are aware the platform is causing harm, including damaging the mental health of teenage girls, but aren’t doing much about it.
Uber is also coming under increased scrutiny for its dubious record on workers’ rights and its failure to meet expectations to reduce pollution and congestion, all while still unable to turn a profit.
It makes you wonder why we are still hanging on to billion-dollar valuations as the primary measures of success.
What if companies were measuring their success by saving a billion lives instead, or a billion barrels of oil? Or sheltering a billion homeless people, or putting a billion nutritious meals on the tables of families in need?
Of course, there’s nothing new about a business being driven by something other than profits. Embedding corporate social responsibility into a company’s ethos has long been considered a good way to run a business, and environmental, social and governance (ESG) metrics were devised by investors who recognised that a business that did not harm people or the environment was less risky and likely to generate better returns.
We’ve also seen the rise of impact investing, which sees capital linked to positive social and environmental outcomes as well as financial returns.
The challenge that’s accompanied these trends has been accountability: measuring social impact is not as straightforward as a dollar figure. Then there’s the danger of not acting holistically — a chair made out of recycled plastic is no good if it’s made using child labour — or authentically, which risks leaving your business open to “greenwashing” accusations.
But the stakes have never been higher to find a way for your company to give back. Addressing climate change and biodiversity loss has become urgent, and the tolerance for social injustice is decreasing rapidly. While the anticipated “Great Resignation” appears yet to have swept across Australia in the wake of the global pandemic, workers will still be seeking positions that have a purpose.
So how do we define this magical creature?
Let’s take a look at the last point. The social unicorn isn’t about mimicking old metrics, it’s about qualitative differences in the approach. Remember Dan Price, founder of Gravity Payments, who made the decision to pay his employees a minimum of US$70,000 ($97,000). At the time, many people predicted imminent failure for his company.
Five years later, the opposite was true: turnover had dropped in half, business tripled, staff who owned homes grew 10x. But more than this, his example not only led others to do the same, it inspired a nation-wide movement to raise the minimum wage. The lesson here is that the social unicorn’s thoughtful action and deep culture doesn’t have to drive the billion change directly in its business model, it can inspire it across the wider society.
The social unicorn can lead a movement and transform a society. And based on recent stories about Andrew “Twiggy” Forrest, it isn’t just startups, but long established organisations that can become social unicorns. The head of one of the world’s largest mining companies wants to help lead the climate change revolution and is making a bold commitment to create a company that will produce five times more renewable energy that our entire power grid.
The effect is quantitative and qualitative, direct impact and also changing other organisations by leading the charge. Not only that, but if Blackrock’s Larry Fink is right, and he usually is, the social unicorn is also a commercially successful unicorn. Fink’s belief is that the next 1000 billion-dollar startups will be in cleantech.
A new way of being a business is emerging, so let’s stop flogging one dead unicorn and start riding another.
Angus Dorney is co-CEO of Kablamo, a digital product development company specialising in artificial intelligence and machine learning.
