Can companies “do good?” - a framework


I talked to a company today that is trying to help people unlearn a specific behavior pattern. In other words, they’re trying to force a behavior change, instead of betting on impending behavior changes.

It’s something that seems especially common among idealistic student founders, who want to make the world a better place but don’t want to work at a non-profit (although often genuine, the stated reason for this is not a low salary but “scale of impact.”

But I posit that changes towards should behavior does not happen without leverage.

The challenging bit to think through is the fact that some new products do change human behavior. Uber has changed how people get home when they’re drunk (arguably reducing drunk driving more than many state-sponsored campaigns). WhatsApp has changed how we talk to family members living abroad (much more often, and cheaply). Twitter has changed how often people will make their snarky comments public (or post honest takes about previously siloed worlds).

But none of those companies have shifted human behavior towards things that people know they should be doing, but aren’t. The missing piece for should problems is wisdom or motivation, not product. Instead, the above companies have only allowed people to follow their instincts, their nature, more easily, by making it easier to indulge in certain human drivers, like a desire for status, discomfort with uncertainty, yearning for a sense of not being alone.

To be clear, I don’t think that you can’t force a change in human behavior. I actually think it’s quite possible, and in some cases, quite beneficial. But I consider it an extremely difficult problem, one that can only be solved with leverage. A startup team building some new tech does not have the leverage required. A massive multi-billion company with unlimited resources and employees though, does. This is why Facebook can take action today in ways that can drastically change how people live a part of their lives.

Meanwhile, I’ve heard VCs say that they don’t bet on new technologies - they bet on new human behavior. That’s the ballgame - looking for companies that are taking advantage in shifts in how people do things. Maybe it’s work from home, or spending more money on the internet, or buying things on demand.

The crux of my worldview, though, is that certain actions create leverage, and certain actions require leverage. And at the end of the day, shifting human behavior towards what you consider “better” behavior is something that requires leverage.

My framework

To create leverage as a company, either:

  • facilitate timeless human nature (Heineken, Ferrari). These companies succeed by feeding into deep rooted desires better than anyone else.
  • bet on impending changes in human behavior (Amazon, Zoom). These companies succeed by correctly predicting or enabling emerging human behavior, often using new technology.

Once you have leverage:

  • Use it to change human behavior towards what it should be (idealistic startups, Facebook’s hope). They succeed by staying alive while they do good in the world, which can take many forms - maybe even being a non-profit. Can also be a (type 1) or (type 2) company. Requires leverage to be successful.

Sometimes fledgling companies try to do that last bit first, but they’re trying to move a massive boulder without a lever. If you want to change human behavior at scale, I’d recommend starting by building massive leverage first, and maybe start by understanding how human nature works currently or will shift in the very near future.