Sustainable business models and social entrepreneurship have been gaining mass popularity around the world as at least one-third of startups now aim for social good. Prior to this shift, social entrepreneurship was often met with confusion, with blurry lines around profit and social impact. These businesses were often met by skeptics that were concerned that social elements could be a branding ploy to profit off of what appeared to be a good cause.
Consequently, in 2006 a company called TOMS revolutionized social entrepreneurship with a One For One model to provide a free pair of shoes to someone in need for every pair purchased. This model has since inspired hundreds, if not thousands of companies around the world to transparently leverage a for-profit model with social good. Perhaps for the first time, it was seen as acceptable and even encouraged to make money while doing good for the world.
One of the Founding Members of TOMS, Jake Strom, has since dedicated his professional life to investing in and consulting companies on how to incorporate social business models into their existing businesses and help new companies scale with purpose in mind. He has coined this as a Profit + Purpose model that encourages for-profit ventures that have deeply woven social benefits attached. For once, profit is not the enemy, but rather a catalyst to drive social good.
A deeper look at this focus and Jake’s business philosophy yielded a handful of key takeaways that any entrepreneur can apply and or learn from when thinking of social elements.
1. Create Evangelists, not Customers
When launching a new business, part of your key branding element is your company’s story and how that resonates to consumers, investors, and partners. In a fiercely competitive marketplace, your brand needs to inspire customers to become fans and evangelists. If you fail to do so, you risk getting lost in the noise.
Strom explains, “Simply put, giving is good business! When you tell a captivating story and back it up with authentic giving, you have the opportunity to speak to customers in a way that traditional brands can’t. No matter what industry you’re in, being remarkable will always be a competitive advantage.”
2. Popular Perception Has Shifted
In the early days of TOMS, the idea that a for-profit business could do well and do good at the same time was surprising to people. TOMS and other social businesses at the time received criticism from traditional investors who argued that there was a direct conflict of interest between a for-profit company that is labeled as a social business. Companies, they argued, are only concerned with bottom-line profits and ultimately prioritize profit over purpose.
Through time, with the success of TOMS and similar companies, perception changed as the model was proven to work and millions of people showed their support. For Strom, this change was “inevitable” and sees this model as the future.
“In the same way that staying in a stranger’s house once seemed weird (hello AirBnB), popular perception has shifted on mission-driven businesses. Moving forward, entrepreneurs will increasingly marry Profit + Purpose in new and innovative ways,” says Strom.