February 25, 2008
Aha! Finally! I have been running Social Businesses for many years (though I did not use the term up until now), so it is delightful to have Professor Yunus not only give it a name, but shine a bright light on such a valuable free-market approach to addressing social change!
Today I run a Social Business called MicroPlace, which is a wholly owned subsidiary of eBay. Much like Group Danone started a Social Business called Grameen Danone, eBay started MicroPlace. As was true with Danone, eBay employees by the hundreds have expressed their desire to create social change through their work. MicroPlace gives them that opportunity. eBay expects us run the business to achieve break-even, but has committed to reinvesting any profits back into MicroPlace and their other Social Businesses. This structure assures we are held to the standards of the free market while allowing us to focus on our social mission. So it was fun to read “Creating a World Without Poverty” because MicroPlace is a perfect fit with the definition of a Social Business.
The question for me is not if- but how- we move forward with making social businesses more commonplace. We still operate in a dichotomous world that is comfortable with black and white- donations that are purely socially motivated and investments that are purely profit maximizing. Anything in between remains weird and uncomfortable. How do we break out of this rigid world?
I would also love advice from others regarding Professor Yunus’s ideas on Social Business ownership. His proposal is that once a Social Business is profitable, we repay investors the amount that was invested and at that point, the repaid investors would continue to be “shareholders” (though without any financial stake). But how do we keep non-financially motivated shareholders motivated? My experience tells me that social motivation is not as strong as financial motivation. Shareholders without financial motivation tend to relax their standards or fade away completely. How do we keep their interest? Furthermore, do I really want an investor who has been repaid in full and has no financial claim to the business to continue to be an “owner” indefinitely? More cooks in the kitchen can sometimes be a bad thing. While having a committed socially motivated board of directors and advisors is wise, that is different from a repaid investor.
Tracey Turner is GM of MicroPlace, an eBay Company