By Julia Barrett
Here’s a piece of advice startups don’t hear every day—stop thinking in terms of how much revenue your company might generate and start thinking about how much you’ll be able to give back. And start right now.
It’s a fact that most early-stage companies spend their days conceptualizing what they want to be, chasing funding, building their first product, hiring employees, establishing distribution models, and strategizing on growth—many with a dream of IPO or acquisition. Those are certainly fine goals.
But, today, it is equally important to think about a company’s personality. Its culture. What it stands for. How its customers, employees, and partners think and feel about it. Can it be the type of organization that brings interesting products to market as well as an active stakeholder making a positive mark within its community, improving lives?
I’m sure some of you founders are reading this and thinking, “Sure, giving back sounds great. But right now, I’ve got to get my company going, make sure my products work and figure out how to grow. Philanthropy can wait until I have something to give.”
Setting the Stage
The most successful entrepreneurs envision the kind of company they aspire to run tomorrow, instead of the one they lead today. What is your desired outcome? Your dream? Is it all about investment, product sales, and a potential exit? Or, does the vision include something greater, something more meaningful? How do you want your customers and employees to see you?
The truth is that despite the best of intentions, companies that don’t commit to giving at an early stage rarely do at all, or have a hard time doing so once they’ve grown. That’s a shame because they miss out on a lot of goodness along the way. Not just the great energy and fulfillment that cultures-of-giving engender across companies, but important business benefits as well.
First of all, it is increasingly obvious that startups with a commitment to giving are able to attract a higher-caliber workforce. In fact, there is a strong correlation between companies with a clear mission of giving back and high-quality employees who embrace philanthropy. An annual survey from Deloitte found that when looking for work, most Millennials deliberately seek out employers whose corporate responsibility reflects their own values. A recent study by NetImpact.org found that 35 percent of students would take a 15 percent pay cut to work for a company committed to corporate social responsibility (CSR). With Millennials poised to become half of the workforce by 2020, this is certainly something a business-minded founder can’t ignore.
Secondly, giving back builds loyalty from within because it provides employees with a sense of purpose—something a paycheck alone cannot. As a result, they’re more satisfied on the job, more engaged and fulfilled. A recent whitepaper from Mandrake identified CSR as the third most important driver of employee engagement overall. HR departments, no doubt, understand the connection. That’s one reason why an increasing number of tech companies are building CSR programs into employee onboarding.
Finally, integrating philanthropy at an early stage provides a competitive advantage to growing your business. As a startup, you may struggle to communicate your vision, or instill in your customers the confidence necessary to see you as a company here for the long haul. When you incorporate giving back into your business model, your customers have a reason to choose you over a competitor, and to stand by your product.
I don’t qualify as a Millennial, but CSR is a strong consideration when I personally make buying decisions. From the water filter I choose—Soma, to the shoes I wear—Ix Style, I want to feel good about how I spend my money. This goes beyond the product itself. For example, both Soma and Ix Style give back to charity: water, a charity building wells in impoverished communities. Even my investments are part of the equation. Wealthfront waives a portion of its management fees to charities through Wealthfront.org.
In its early days, Salesforce pioneered a now widely adopted philanthropic approach known as the 1-1-1 model, which means the company contributes one percent of equity, one percent of product, and one percent of employee time to nonprofits in the communities where the company operates. On every employee’s first day on the job, for example, they volunteer. Every single employee helps someone else.
Salesforce isn’t the only tech company doing this. The movement to set aside a portion of equity, product, and time is spreading. More than 800 startups in 25-plus countries have committed to give back through an effort called Pledge one percent, which encourages startups to integrate philanthropy into their business models at an early stage. For example, NYC-based startup Auctio, whose founder’s roots are in Colombia, has pledged to help bring technology into Colombian classrooms. Auctio’s one percent may be small today, but consider the fact that, before it went public in March 2012, Yelp set aside one percent equity to later establish an employee-advised fund, called the Yelp Foundation, which now manages assets worth more than $30 million to support small business and community initiatives.
Similarly, Atlassian, an Australian collaboration software provider, started donating one percent of equity and product while giving employees time off for charitable work immediately upon its founding a decade ago. This is now a huge part of the company’s identity.
“The reason I’m passionate about pledging one percent is that it’s been so beneficial,” says Scott Farquhar, co-founder/co-CEO, Atlassian. “We started doing it back when we were really small. We didn’t completely know what it was all about. But years later, it’s provided huge benefits to our company and staff. It’s helped hundreds of thousands of children in the developing world. And we have a very engaged workforce that feels as if it’s truly making a difference.”
“I want other founders out there, people starting companies and not knowing how to give back, to realize that if they start pledging just one percent of their equity, products, and employee time while they’re small, they will get all kinds of incredible benefits when they become successful,” continues Farquar.
It’s hard to disagree with Farquar’s logic. Giving back doesn’t have to represent a major chunk of a company’s time or financial investment, but it can generate massive pride in organizations that embrace it.
Start Up Considerations
If you have ever imagined your startup making a meaningful difference in people’s lives, infuse giving into its DNA from the very beginning. It’s never too early to start giving back. SW
Julia Barrett is the global program director, startup relations at Salesforce.
Aug2016, Software Magazine