Mission Based Businesses

I've talked a fair bit here about the passion for the problem being an important part of entrepreneurial success. I was reminded of that when I read Max Chafkin's profile of Rob Kalin and Etsy this morning.

If you click on that link and read the entire piece, you'll come away wondering how Etsy can be a successful business. Rob does not come across as a business oriented person. And Etsy comes across like a big chaotic flea market. Both are sort of true. But Etsy is a very successful business, growing rapidly, making profits, cash flow, and very much a candidate to produce a lot more of both in the coming years.

What comes first at Etsy is the problem/mission. Etsy wants to make life easier and better for people who make things and who want to make money from doing that, either part time or full time. Etsy is about commerce between two people, one who makes something and one who wants to buy it. Rob even says in the article that trying to maximize shareholder value is "ridiculous," adding, "I couldn't run a company where you had to use that as an excuse for why it was doing things."

And yet the shares our firm bought in Etsy back in 2006 have gone up in value more than 10x based on the last stock purchased in the company (last summer). One of the things I've learned over the years by working with special people like Rob is that you can create shareholder value as "exhaust" by focusing on an alternative mission, one that is closer to real problems faced by real people.

We look for that passion for solving a real problem when we meet with entrepreneurs. As my former partner Jerry says "those who are in it just for the money are not the ones to back". So true.

#VC & Technology

Comments (Archived):

  1. kidmercury

    No doubt! If I were an angel/VC investor this would be one of the easiest filters I would use to find the good stuff amidst the legions of broke ass fools asking money. If mission statement, contine onward, else don’t let the door hit you on the way out, sucker.This is my alltime favorite post in fredland. Mission statements and sincerely pursuing them are everything. Everything!

    1. Mark Essel

      Real beats hype. Right on kid

    2. karen_e

      Love you, Kid.

  2. Suyog

    In more than one way, this is what Jim Collins Built to Last also preaches. The idea of mission, core values, purpose, vision etc are all very similar.Another interesting read is Umair Haque’s The New Capitalist Manifesto. Unlike most of his blog posts, the book is tempered down but makes the point that you shared.Good stuff!

    1. fredwilson

      Sustainability and mission are correlated

  3. Guillermo Ramos Venturatis.com

    …passionate entrepreneurs building&expanding large networks of engaged users helping to solve real problems…

    1. fredwilson

      Narrow but solid investment thesis

  4. Gytis Labasauskas

    John Doerr has a great quote, which is something like: “The real entrepreneurs are missionaries rather than mercenaries”. And it’s so true when you look at the most successful companies in the world (in this case we are talking about internet and tech companies).If most entrepreneurs were mostly oriented to make money, we wouldn’t have so much great startups and new ideas created right from college dorm rooms :)Of course money comes with that, but only money is not a strong motivation enough to keep you working on your idea when the rest of the world says that you’re crazy ๐Ÿ™‚

    1. fredwilson

      Great Doerr quote! !

      1. Garrett Melby

        Has everyone seen Doerr’s 2007 TED talk which he end in tears, speaking of his hopes for his daughter.Money quote:”We’ve go to make this economic, so that all people and all nations make the right outcome the profitable outcome and therefore the likely outcome.”The whole talk is worth watching, but this 60 second edit gets me up in the morning http://www.youtube.com/watc

  5. awaldstein

    A keeper Fred:”…you can create shareholder value as “exhaust” by focusing on an alternative mission, one that is closer to real problems faced by real people.”Add passion to growth by network effect and you seemingly have a filter for many of your investments.

    1. Nate Quigley

      that was my favorite quote as well. shareholder value as exhaust.

    2. William Mougayar

      Exactly. Shareholder value is the outcome.

    3. Donna Brewington White

      Agree- great quote. Just reblogged it on Tumbr. Meaningful “take away” — love it!

  6. scottythebody

    “We look for that passion for solving a real problem when we meet with entrepreneurs. As my former partner Jerry says “those who are in it just for the money are not the ones to back”. So true.”Love that.It’s also part of what makes me somewhat sad about the acquisition exit. So many great services have been built and destroyed that way. While a lot of people end up getting paid, which is great, a lot of interesting problems that people were once passionate about remain unsolved or fade away.

    1. fredwilson

      I know. And I feel similarly

      1. scottythebody

        *cough* Yahoo! It could be adopted in the langue. Just as “dooced” came to mean to be fired for writing about work on your blog, “Yahoo-ed” could be the stifling of innovation brought on by the acquisition by a large corporation of an ascendant product or service.

  7. Garrett Melby

    This is why our starting point at GoodCompany Ventures is entrepreneurs who are deeply engaged in unmet social needs. Iterating technology responses and business models around a well understood and motivating problem is easier and more likely to succeed than starting with a technology insight and trying to find a problem to fix. Unmet social needs are the source of new all new markets and, in the early stages, getting the market right is more important than getting the technology right.

    1. Gytis Labasauskas

      Social factor is for sure important, and I’m not suggesting to remove it from the priorities list, but don’t you think that “everything social” is currently overrated “problem”?People forget that google became google by solving search problem, not social. The social factor came to the public domain only after the facebook success.There are still very important unmet problems like personal finances, security, everyday activities and so on…

    2. fredwilson

      GarrettAre all your investments in for profit businesses?

      1. Garrett Melby

        Yes, if we do our job right. We select projects that have potential to be commercially self sustaining and ideally scalable enough to turn market rate investors on to the potential of social finance.With have the most fun with social objectives where the profit opportunity is not obvious and have a bunch of MBA students looking at ways to triangulate adjacent markets, cross-subsidies and community monetization (i.e. will cell phone companies subsidize personal solar devices in West Africa?).BTW, Jerry did an awesome workshop for our entrepreneurs last summer.

        1. kidmercury

          IMHO virtual currencies have the potential to subsidize nearly everything. healthcare, energy, housing, transportation, education…..cost of living goes to zero. a golden age awaits us.

  8. Harry DeMott

    My dad always told me: “If you want to make money – find a problem and fix it – and continue focusing on the problem – if you do that – the profits will follow.” sounds like ETSY continues to focus on fixing the problem.

    1. Nick Grossman

      I got similar advice from a friend’s successful dad, when I was growing up, and I think about it all the time.

      1. Nick Grossman

        I should note that my dad gave similar advice, but without the explicit (“and profit will follow”) so for some reason my friend’s dad’s words always stick with me. Sorry for not giving due credit in the first comment, Dad!

    2. Mark Essel

      Sound advice from your pop Harry. What problem are you focused on now?

    3. Robert Holtz

      Your dad gave you good advice there. Earl Nightingale said remember that every dollar you will ever earn and ever spend comes from and goes to people. Find a way to be of service to people and people will acknowledge it by coming back for more.

  9. Nick Grossman

    I like this.Reminds me of a quote I read on Andrew Parker’s blog recently (the quote itself was alt-text on an XKCD comic): “I never trust anyone whoโ€™s more excited about success than about doing the thing they want to be successful at.”

    1. fredwilson

      I saw that too. It is excellent

    2. Suyog

      enjoy the process over results ๐Ÿ™‚

    3. ShanaC

      Success by itself is overrated. Success with your personal missing, that is much better

  10. reece

    I always love the Hewlett Packard story… just two guys who wanted to build stuff together.

  11. JamesHRH

    A great business shares a vision of the company’s intended impact on the lives of customers. Etsy is a great example. So was early MS (‘a PC on every desk’). So is FB.All the discipline and measurement is required to protect the commitments the business makes to employees, customers and supply partners.When it comes to money, I like this quote: “if you don’t run the money, the money runs you.”People who don’t want to build something and have personal wealth or power acquisition as their goal go into finance – with a limited number of exception ๐Ÿ˜‰

    1. Dave W Baldwin

      Your last line goes with ‘people who can’t sell become sales managers’ ๐Ÿ˜‰

  12. LIAD

    Devil’s advocate————like a dog, a business can only have 1 master.the pursuit of profit & the advancement of a cause can be the dream-team in fair weather when they facilitate and enable one another, but, what happens when storm clouds gather, the going gets tough and they become at odds, even directly opposed to each other.The mission brings about a 10x reduction not increase in share price. What before drove growth now hinders it. What previously acted as a cohesive for employees and rallying call for customers now does the opposite.There will be some who are compelled to continue regardless. They got involved for the mission and are prepared to endure hardship and forsake personal gain for it. Others however got into it for hard cash and they will be desperate to jettison the mission and those who espoused it…..I predict a riot.

  13. im2b_dl

    I love this post. In this paradigm shift in world culture & innovation, which seems to have gotten so focused on “success = who can spin where the web is going based on a web development demographic to the largest tribe”… & that the “secrets to success are completely and prioritized in thanking people, getting people to trust you and not the product & how founders socialize” instead of making a product that is good and worthy to the general public, which truly solves their problem so they can trust the product because IT rewards their use by solving said problem, not the people who created it… & IMO ..most problems are not technological efficiency first.I like posts that talk about success is about a product solving a problem well… not about a product doing well because the creators’ behavior was nice, social, popular… etc.

  14. Jon Lim

    Couldn’t agree more, it seems to always repeat itself with blog posts and speaking engagements, but it always rings true: having a mission and being passionate about it will eventually lead to profits.

  15. karen_e

    I also have a friend who cites a variant of your thesis here on a regular basis. He is a sculptor and breadwinner of a family, which is ordinarily not an easy combination in life, yet he makes it work and lives well. When people talk about what cars or whatever else they’re “going to buy” when they get rich, he says, with his beret cocked at an angle and in the slight accent left over from his California French Basque youth, “don’t focus on the money, focus on how you are going to make the money.”

  16. vankula

    Is it tougher to make the “solving a real problem” case when talking about entertainment based startups (Zynga games, Angry Birds)? It’s hardly an unmet need – is it that people are always looking for new ways to be entertained?

    1. Dave W Baldwin

      Different take… inside the game/entertainment design you’re working on, is there something moving forward that will be enabled via your design?If not, yet you want to do something that has the positive impact, follow thru and you will gain contacts that may lead you to that different tier.

    2. Tereza

      People are lonely, bored, and need the affirmation they’re not getting in their daily lives.

      1. ShanaC

        How much do you think this is a driver in human behavior in general?

        1. Tereza

          Once you get past the hurdle of basic survival, I think these are huge human needs. Bordering on insatiable.And interestingly I see this tying into the “mission” conversation, albeit for people not businesses.People who lack a personal mission founder and flail. They wait for things to happen to them.I think the world would be a happier place if there were more entrepreneurs. Because they’d be making explicit choices, owning their destinies.I think mothers have a complicated situation because their mission is loose, difficult to measure, long payback and little in the way of ongoing affirmation: “raise good kids”.They get little feedback on progress but are subject to tons of vanity metrics (YAY she’s 95% in heigh and weight! He got a soccer trophy! She got into Harvard!). And while at the beginning they need us intensively, it evolves into “interruption parenting” (they need you less, but you can’t really predict when, so you have spikes of intensity and stretches of boredom, why Cafeville does so well). Eventually (teen years) they need you to be there into order to reject you. Then hopefully eventually they come around and realize they actually like you and want to hang out with you.Yes, lots of very real and addressable emotional needs spring from running this marathon. And web and mobile media are well-suited to meet them, in a million different ways.

  17. Pete

    Charlie Crystle, paging Mr. Charlie Crystle…

  18. Siminoff

    Awesome post Fred. The one major failure I have had was a business I did to just make money. I hated the industry but knew that it could make money, which it didn’t.While it was my biggest failure from a cash perspective it would have been much less painful if it was at least something I was passionate about or something that tried to make the world better. This business did not do either of those things.It is nice to see you profiting from funding people’s passions and missions to do good.

    1. PhilipSugar

      Great point.I’ve always thought life is too short to do something you don’t like with people that you don’t like, convincing yourself you’ll make a lot of money.If the money doesn’t come through what a bummer.And in an ironic twist of fate, I’ve observed that if it does come through you end up not being happy either because you use money as a scorecard to judge happiness and somebody else always has more.

  19. Steve Poland

    Older TED talk, but a good talk on marketing not what you are selling, but why. http://www.ted.com/talks/si… inspire_action.htmlThis is an absolute must see. 18 mins long. Talks about why Apple continues to innovate and Dell/MSFT etc do not.Very online with Etsy– they focus on why vs what.

  20. Dave Pinsen

    I wonder to what extent this missionary zeal on the part of some founders is aspirational/delusional rather than real. In Etsy’s case, it’s built a profitable business model, and it’s been a great investment for you so far, but last time I looked into this, only about 0.04% of Etsy sellers were making a living selling crafts on Etsy. And there were also concerns that Etsy puts downward pressure on crafts prices, by putting local craftswomen (e.g., at fairs) in competition with those elsewhere.

    1. Dave Pinsen

      I’m also reminded of a recent Lunch with the FT interview with Howard Schultz (not technically the founder of Starbucks, but the man who built it from a coffee bean seller in Seattle to the enormous chain of coffee bars it is today). The FT reporter, John Gapper, cleverly asked Schultz to pick a restaurant that had some meaning to him in New York, rather than a generic expensive place, and Schultz picked Barney Greengrass, on the Upper West Side. Here’s the part where Schultz’s talk about passion meets Gapper’s skepticism:Appealing though Schultzโ€™s narrative is, I visit Starbucks not because I am in love with its stores but because it offers a reliable level of quality. If I want something quirky and adorable, I will go to an independent. Surely, I suggest, he does not think that a corporation with 17,000 stores can combine size with Barney Greengrass-style authenticity?Schultz glances down, as if realising that he has not yet closed the deal. โ€œYou can. You can,โ€ he says quietly. โ€œWeโ€™re doing it right now.โ€ He still looks disappointed by my question and he switches to corporate language.

      1. JLM

        What I find interesting about Starbucks is that there very existence has spawned their own competition. If one did not have “corporate coffee”, it would be almost impossible to have “local coffee” because there would be no immovable object against which to push and from which to differentiate.What Starbucks has brought us is the resurgence of the coffee house as a locus of intellectual vigor in much the same way that the coffee houses of Europe kept the flame of intellectualism alive during the Dark Ages.Of course, I might just be being a bit melodramatic but I do love having a coffee and a chat. I particularly love it because I can leave when I want to.

        1. Dave Pinsen

          True. Starbucks also created the category of premium coffee in a lot of places which allowed local shops to spring up and fill a ‘super-premium’ niche. Around here, at least (NYC metro) it’s not as if we had great indie coffee places that were put out of business when Starbucks opened up. On the contrary, we didn’t really have any indie coffee places. If you wanted to get an espresso drink, you had to go to a restaurant, and then you felt obligated by buy more than the drink, you couldn’t hang out and chat or work at leisure and then leave when you wanted to, etc.

        2. ShanaC

          me too, there is something about coffee that creates discussions, that and chilled out bars.

    2. Dave W Baldwin

      As you know Dave, reality is a shift to a craft fair in the clouds. Those with crafting ability need to learn about the new social realm that is in its infancy.This applies to all trades for when does the ‘tipping’ take place where a tech can direct the machine to do the procedure in surgery replacing the person who spent the funds on med school to become that one of a kind surgeon?

      1. Dave Pinsen

        Robotic medicine is actually not the best example here, Dave, for a couple of reasons. One is that a reason for its use is often to make smaller incisions (since robots can have smaller ‘hands’). But a bigger reason is that American physicians so far have been pretty successful at keeping technology and globalization from cutting into their compensation.Whenever there’s a robot surgeon operating on someone in the U.S., there’s generally a surgeon at the controls of the robot. And American physicians have so far succeeded in maintaining an onerous obstacle to foreign competition: lobbying state legislatures to require even fully-qualified foreign physicians to re-do their entire residencies in the U.S. before practicing here.

        1. Dave W Baldwin

          True, I was just using that as an example showing it moves across the other job categories.In the latter teens, if the numbers play out regarding lower number of surgeons matched with the rise of real AGI (no bullshit definition) moving in the 20’s, the change over will happen, starting with doing more with less.It will be okay since the ‘tech’ in that field being designated as inferior smarts will be smarter due to what they have to work with around them.And that comes as we move from the need of 100’s of programmers doing what the intelligent machine can do. Hell, at least we can get VA to mean what is supposed to rather than current dumbed down designation of biological cheap temp.

          1. Dave Pinsen

            I agree that the economics will force changes in health care delivery and physician compensation, but I think one of those changes won’t be technological. One of the reasons surgeons and other specialist physicians get paid so much is the weird, hybrid economic position they’ve been allowed to occupy: they bill per procedure, as if they were small businessmen/entrepreneurs, but in many cases, half or more of their compensation comes from the government (via Medicare, for example), which makes them quasi-public employees.To the extent that the share of physician comp covered by the government is increasing, it starts to make less sense to compensate physicians on a per-procedure basis. Governments don’t pay cops on a per-arrest basis, after all. So I can see a migration toward a salaried comp model for the bulk of physicians, with a tiny handful of them eschewing third party payments to run boutique practices for the super-wealthy.

          2. Dave W Baldwin

            Very good point. But in the long run you have (at this point) two parallel avenues of development- Nano/Bio and Robotic/AGI.Yes, you can move into simpler procedures done via robotic precision matched with AI that does procedure via established norm, learning to pivot when conditions change, sharing experience with other AGI/Biological Units.Or, you can have the running thru of Nano or (as we are already looking at) Femto sized monitors/bots… probably what makes most sense for current discussion is the Nano delivering vehicle of Femto tool/goods.This leads to the Bio side of the Nano/Femto where you train the Bio agent (demo team) to tear down the bad growth and the Bio agent to rebuild the new.To say the Physician’s Association will kill all of this places too many eggs in one basket. Yes, interests like they combined with old school governmental minds held back Drexler for a while, but it is coming.Otherwise, everyone needs the wake up call moving beyond marketing… and the new frontier it brings.You are very wise.

    3. Brad

      Dave when a door is open, some will see success and others will falter. The local craft maker may lose market share, but it is the responsibility of the local business person to make better products and provide better service to stay ahead of the curve.I do not know much about the stats or the pressures put on the crafter by etsy, however, it is a system that allows someone to monetize and control their own business.An interesting stat would be how many of these businesses were making money before and how many have gained profitability since joining etsy? I am all for the local business finding success, but I do not subscribe to the idea of protection. Rather I think the small and local business has a much better chance of finding success through innovation and service with local customers. A human touch will still be more successful than a website, IMHO.The local coffee shops should do better and create a local flavor that can be adjusted quickly based on the customers response. However, they need to be constantly re-inventing to be viable.

      1. Dave Pinsen

        Local coffee shops are a different animal, because their competition is limited to their geographical vicinity: a coffee shop in Portland isn’t competing with one in Seattle in serving lattes. Etsy, in contrast, puts the craftswoman knitting hats in Portland in competition with the one in Seattle.I’m not calling for a jihad against Etsy. Just splashing a little cold water of reality on Fred’s happy talk here. A tiny handful of founders, early employees, and early investors have done very well with this model, aggregating the individual efforts of hundreds of thousands who haven’t.

        1. kidmercury

          who says they haven’t done well? prior to etsy there was no realistic opportunity for anything for many of them. now they at least have an opportunity to monetize their passion to some extent. if they want more they can work harder, i’m sure etsy would like that.

          1. Dave Pinsen

            Etsy’s own numbers say the vast majority of them haven’t done well. See the link I posted elsewhere in this thread.

          2. kidmercury

            no, you are interpreting those numbers to mean they aren’t doing well. if igive a person $1, they are not doing well in the sense that they cannot liveoff that. but they are doing well in the sense that they are $1 richer. itis a question of expectations, cost/benefit, opportunity cost, etc.there probably is an opportunity for someone to come along and create aplatform that is better for many craftspeople, but at least for now, etsy isone of the best options available. and if they don’t continue innovating,they will probably lose out to a better platform at some point.

          3. Dave Pinsen

            I get the sense you didn’t click on the link, because Fred and I had this conversation last year. Yes, it is a question of expectations, but the expectations of many crafts people apparently were that it was possible to make a living via selling through Etsy. Fred’s off-the-top-of-his-head estimate last year was that maybe 10% of Etsy sellers do that, but Etsy’s own numbers at the time were about 0.04%. Big, orders of magnitude, difference there.Again, I’m not faulting Etsy for its business model, and you’re right that if they weren’t doing it, someone else would be. I’m just highlighting the contradiction here in holding up Etsy as a warm & fuzzy, mission-based business when its financial rewards are so heavily skewed to so few. Putting knitted covers on the ventilation pipes doesn’t change that.

          4. kidmercury

            i don’t think mission-ism and income inequality are necessarily at odds inthis particular situation. kalin is probably more pious in his mission-ismthan the typical etsy artist, and he probably makes more money too.

          5. Dave Pinsen

            If the mission is helping craftswomen make a living at their crafts, and ~99.96% of them aren’t, then I think the income inequality is notable.________________________________

          6. kidmercury

            sure, although the journey of a thousand miles begins with a single step.they’re not going to make much of a dent in that number barring drasticchange to their model, but they’re making it easier for those that will.paving the way.

          7. Dave Pinsen

          8. Brad

            “Well” is such a relative term. To a person used to making $400k a year, etsy is not going to make them feel rich, but for the people who want to share their craft, they may not care about becoming rich through Etsy.Where I do agree with you is that a product has to create results, in Etsy’s case it has to create a result that the suppliers are excited about and customers that like the crafts. It seems with the growth, someone is happy with the results. It may not be everybody but many are happy with what is happening.I remember being pitched Amway in undergrad, they promised riches and great products. On the sign up form it stated the number of people that make more than $100k per year. I think it was less than two percent. Since then, I have seen hundreds of people get in MLM’s and many know that they will never see the $100k, but they enjoy the functions, comradeship and the intangibles of being part of a group.I would guess that many of the people who are a part of Etsy do not care that they make a ton of money, rather they enjoy what they get from inclusion in the system.Thanks for the discussion, this blog is fantastic because people are thinking and bringing different perspectives that helps me with my own business.

          9. Dave Pinsen

            “Well” was admittedly vague. But by the metric of being able to make a living (however modest) selling on Etsy, about 0.04% of Etsy sellers fell into that category, last time I checked.Nice corresponding with you as well, Brad.ย ________________________________

          10. fredwilson

            it depends on your definition of “done well”for some people, an extra thousand dollars a month matters

    4. kidmercury

      too bad if local craftspeople can’t keep up. maybe next time they’ll hustle harder. or get on etsy and up that percentage of fulltime etsy craftspeople!

      1. Dave Pinsen

        Or maybe they can adopt a half-dozen foster kids, teach them to knit, and multiply their output on Etsy that way!

    5. Aaron Klein

      Making a living isn’t the primary goal for most sellers on Etsy, I’d wager.But I know about five different stay-at-home moms who make some serious bank selling their wares on Etsy and they love it.Their husbands pay the mortgage. They get to spend time with their kids and make the fun money.To each her own.

      1. fredwilson

        that’s the counter argument to the “etsy doesn’t scale” thing

  21. Dave W Baldwin

    Agree with this post.On the other side, it is tough getting crap from those that want easy life and drown in envy, since in their mind everything is about the money.Then you throw the Devil’s Advocate a slider, explaining the conservative revenue outlook, explaining profit made enables the better problem solving product in the future.Per Liad’s post, add to the potential riot all the “I want to change the world for the better, not worrying about dollar” bozo’s who are lying thru their teeth.

  22. JLM

    This post strikes me as a fairly adolescent and sophomoric assertion of the obvious — successful companies are going to have a well crafted reason for existing and that craftsmanship is going to evidence itself in an understandable mission statement, a clearly articulated vision and a statement of its values to be employed in accomplishing its mission in support of its vision.This is not a new concept and successful enterprises have been doing it for centuries. It is not new.Shareholder value is a finance concept but it is as tightly woven into the fabric of mission and vision as is the company’s logo. It is the RESULT of having a worthy mission, a clearly articulated vision and a statement of values — and then executing with all the leadership and management skills necessary to get the brass ring.The idea that the the worthiness of the mission somehow dwarfs the necessity to fund the operation by making money and then disregarding the necessity of dividing the amount of money by the number of shares outstanding is silly.Making money, keeping score by calculating the value per share and having a worthy mission are not mutually exclusive concepts, they are the “adult” portion of business.Keeping financial score is the way our childlike dreams of fun and splendor are funded.One can do more good works with a bit of money than one can do without any money.The most recent generation did not invent sex or business.

    1. kidmercury

      “this post strikes me as a fairly adolescent and sophomoric assertion of the obvious” #ohsnaplol i see your point, though i see lots of entrepreneurs and companies that do not really have a clear mission statement or purpose — and then there are those that do profess to have a mission, but only as a marketing tool and do not really embody the spirit of their mission. so while it is obvious and an age-old truth, i don’t think it is heeded nearly enough (in spite of its obviousness). but then again i suppose many forms of wisdom rarely are heeded enough!

      1. JLM

        I really did not mean that statement in the offensive manner in which it may come across as a criticism of the blog post but rather as an assessment of what is happening in the world. Not Fred’s fault, mind you.When one has a mission, vision, values it has to be driving the enterprise to some destination and I think that destination is the pay window. Not in a crass way, but in an obvious way.CEOs and certainly not VC do not have the luxury of being altruistic in their endeavors especially with other people’s money.There is a huge amount of phoniness in business today which seems to ignore that it is necessary to have a clear mission, vision and values to make a buck and certainly to make a lot of bucks.One should not focus on money to the exclusion of everything else but it is a worthy objective certainly for the employees and craftspersons.I am always reminded of what Napoleon said: “A soldier will fight long and hard for a colored piece of ribbon.”Employees want to follow folks who have inspired them with their articulated mission, vision and values.I fear that, as you have noted, many such utterances are just baloney and uttered solely for the effect and not for the genuine impact. It is a sacred responsibility to lead employees to the stated outcome because you cannot pay kids’ tuition with good feelings.Get the mojo and the money and get to the pay window.

        1. fredwilson

          That was exactly the point of my sophmoric post

      2. Dave W Baldwin

        How about this one? “How about making the Smartphone…Smart?”This was something I played with back when and unfortunately set to the side.I know, more proper English would be endowing the Smartphone…with Intelligence. Just sounds too blase.

    2. awaldstein

      Hi JLMI both agree and not at all.Of course you are correct and I’m in your camp that money is the best scorecard.But…it is critical that every generation thinks that their connection to their music is the best and that indeed, they did invent sex for themselves ๐Ÿ˜‰

      1. JLM

        Well, the music is true. Each generation has its own anthem but my kids cannot believe that we rocked to the Stones, Beatles, Who until they “discovered” them.They think the Stones, Beatles, Who are way, way too cool to have been around when we were their age.I tried to explain to them once that the world actually existed before personal computers, cell phones and the Internet. It is an ongoing sale thus far. I have not yet closed the deal.I love that each generation thinks it has invented everything — that is the spice of life but then I often visit w/ my 93 year old Dad and I understand that we have been doing this since the beginning of time. I love listening to him telling me about the advent of cars, etc. It is unbelievable.I do not love money but I do love what you can do w/ it. I do think it is the primary way you can keep score but in many instances when you have the mission, vision, values stuff down tight — the money cannot fail to appear.You simply have to have faith and have been to the rodeo more than once.

        1. fredwilson

          I love what you can do with money too.

        2. PhilipSugar

          I love what you can do with it as well.I think when you use it as the primary way to keep score you have to be very careful of time-frame and effects. That doesn’t mean don’t measure it and I don’t think its important.From a business perspective a great (bad) example would be GM. They got the crap kicked out of them by companies that primarily cared about building great cars because instead of concentrating on building great cars, they had accountants figuring out how much more money they could make short term by putting shitty plastic and parts in their cars and in ten years they literally had to pay people with trunk money to take the crap off their hands.On a personal level I think a ton of the bad behavior you see on Wall Street is by people that only use money as their scorecard. Who cares if you’re bundling up dog shit mortgages and selling to multiple times and while betting against it via another. Bam, you made the firm $10M on that trade give me half. Yeah, you were selling it to some public employee pension fund manger and the guy that was betting against it was as sophisticated fund manager with tons of talent and computers who had access to the data before you bundled. Lost some friends over that. One would liken his day to here come the New England Patriots playing your high school team. On a personal scorecard he did very well, you know what though? He was always miserable because somebody else did better.I like your taco analogy.

          1. fredwilson

            Great comment Phil. Money shouldn’t be a scorecard. Life is not the presentvalue of future cash flows.

          2. PhilipSugar

            I understand the sentiment of your post Fred.Don’t come to me telling you how much money you are going to make on this. Tell me why this is your passion and lets figure out if it’s a fit.In technology, its way too hard of a mental game to think that is going to work. You need passion, and the ability to convince others. I see it when I think an employee is coming thinking they can make their retirement money by 30.Really???? you want to retire???? F/U money I understand. Retire???? Really???? Why would you not do the thing you love???Ok, you work high steel, and your body isn’t going to last. You make cast iron sewer pipes in a hell hole. I know you, I’ve lived in your neighborhood, I drink Bud with you, I love you. Got that.But if you don’t have the passion, you are on to the next thing before it works, and as Ellie said most overnight successes have been pushing the ball up the hill a hell of a long time……look at Apple.Yes, if you’re pitching me some purely financial deal, that’s what I want to see (at this point I don’t believe you and that is a major problem, see above post)Finally, as to your post on going out on top a couple of post’s back. Jim Calhoun of Connecticut said it best. When I don’t fear losing more than I like winning. I’ll give it up.

          3. fredwilson

            That’s a great Calhoun quote. Third title last night, right?

          4. PhilipSugar

            Yup….lived there for a while, working for Otis Elevator. Disquis, cuts off comments five deep….probably a good idea to put out flame wars.

          5. JLM

            Of course money should be a score card. Why not?The more money one has, the more good works that can be funded.Money is not the enemy of good works, it is the enabler of good works.If you have a talent for making money and someone else has a talent for good works, then life is about you following your gifts and talents and being able to support good works.The cure for cancer will take money and those who can make a bit and invest it will be as critical to finding the cure as the most ardent research scientist.We need to stop buying into the nonsense that somehow success is not important to the future of the world.

          6. fredwilson

            it’s the wrong score keeping systemit leads to all sorts of bad behavior

          7. Robert Holtz

            Money is PART of the scorecard but there are many other factors that define success; not all quantifiable.What people forget is money is nothing but a symbol. It is a game piece humanity invented to measure only one metric of success. It is one single instrument out of an entire orchestra.And people start to prefer the symbol over all else.I gotta paraphrase Chopra again and say, confusing money as the mission is like choosing to value the map instead of the territory.

          8. JLM

            Much of the problem with Wall Street is simply the greed of people on Wall Street and the inability of the regulators to do their jobs.We do not need new rules, we need to enforce the ones we already have.When the Chairman of the Fed admits he cannot even begin to unravel some of the derivatives conjured up by the mousse in the hair crowd, then the system is the problem.If you cannot explain it to a fairly smart 4th grader and you cannot map it on one 3 x 5 index card, then it should be killed in the cradle.Wall Street is a rigged game. But it is the only game in town just now.

    3. richardgarand

      You’re right – and yet this isn’t recognized nearly widely enough to stop repeating the obvious :)An investor’s perspective is going to be somewhat similar to a manager and an employee, and we now have a lot of research and experience backing up the fact that for any job that’s not routine and repetiive it’s not effective to motivate employees solely by saying “if you do this 10% faster you’ll get paid a lot” (Dan Pink’s work is just one recently example).It sounds like keeping score with dollar values works very well for you – my guess is that out of all the people who ignore everything else it’s fairly rare to find someone who ends up creating non-monetary value and purpose, and out of all the people who ignore money it’s fairly rare to find someone who ends up creating sustainable economic value and gets to keep putting their resources into what they’re doing.Just as you can’t train an employee by telling them exactly what you want them to do without explaining why, I would expect that most people will have a hard time running a business without focusing on results they can see outside their bank account. Once they have a good understanding of this then it’s time for them to learn what resources they need to find in order to get those results. If they start focusing on the resources and not the results they’re a lot more likely to crash.

  23. Aaron Klein

    I think the killer aspect here is that a mission-driven company acquires stakeholders – employees, customers, partners and even suppliers and investors – who want to be a part of something noble. That’s the special driver that can result in even bigger profits for that kind of company.That said, I find it amusing how many companies put up a false front of “mission” when it isn’t there…like the penny auction company CEO who brushes a false tear from his eye and says “we bring iPads to poor people who can’t afford them.”It doesn’t take too much due diligence to separate the wheat from the chaff.

    1. PhilipSugar

      Aaron I thought about the penny auction guys the other day. What I don’t understand is how that doesn’t constitute gambling. I was going to write about it but I didn’t even want to dignify the sleazy subject. You’re right its probably more regressive than the lottery.

      1. Aaron Klein

        I couldn’t figure out how they could do it either.Although apparently, they couldn’t either, since the biggest one just went bankrupt.

    2. Donna Brewington White

      I like this kind of talk, Aaron. “Noble” is a good word and even more so when applied to business — which doesn’t happen very often.Let’s change this. (Assuming that every contribution counts however small.)

      1. Aaron Klein

        Absolutely. And I love businesses with a noble mission that can be insanely profitable – frankly, I think I just co-founded one! We’ll see. ๐Ÿ™‚

        1. Donna Brewington White

          That’s the spirit!(I’d be willing to bet that you have.)

  24. Sofu

    Isn’t this just another way of saying focus on the customer/user?

  25. Stanley Stevens

    This reminds me of a great quote from my current reading by Peter Guber in ‘Tell to Win’, in which he says “Listening to my daughter tell me her story with a sense of purpose I’d never heard before, I knew this was a mission from the inside out, not outside in”. He said this after he questioned investing in his daughter’s business, but quickly changed his mind as he saw her passion and desire to reach her internal, non-monetary-driven goal. This quote has got me questioning whether my current job is aligned with my career objective of creating experiences for myself around “acting from the inside out”. Other examples: Facebook (connecting people, and more honestly, Mark’s desire for a social life), Google (organizing information), Etsy, my dad’s business, and many more. People who don’t see work as “work”, and are more interested in striving to reach their personal goals and aspirations are those who succeed.PS – Peter’s book is highly recommended: http://huff.to/eKrzqH

  26. ShanaC

    While I think having mission is important, it is more a pinpoint passion.EG: I really think and am really passionate about solving business problems, since most people will work a lot in their lifetime, spend a significant amount of time at their place of work, so we should make their work lives betterI’m passionate about advertisements because I see price weaknesses hurting a lot of people long term, and I think a lot of advertisements are crappy.None of these things that I like work well in terms of a mission to save the world. I’m ok with that, it is just what I like. And I suspect that most people just enjoy the tinkering process to get to the business around some idea.So is a true mission really necessary? Or is it more the passion and the curiosity behind how the thing works

    1. Dave W Baldwin

      We are in a formative time where the options of marketing are evolving. No matter what, marketing is the name of the game. Of course having a product that serves many needs doesn’t hurt either ;)As we move thru this decade, the solving of business problems will move directly into communicative/storage needs of family/friends along with business.Match that to the next tier of marketing and there is plenty of opportunity to help.Maybe start a group that contacts firms and clients regarding their sucky ad campaign ๐Ÿ˜‰

  27. ShanaC

    Also, this post reminds me that I know someone who is trying to launch a business on etsy….

  28. tomnixon

    Contrast to Facebook. I think it was Umair Haque not long ago who linked to an article saying how the talk inside Facebook is of ‘building the first $100BN company’ – i.e. money for money’s sake. Complete lack of vision and passion for making the world a better place.

  29. Philip J. Cortes

    I think it was Chris Dixon who said something along the lines of “the only people who make enough money to never have to work again are those that would never stop working.”(I’m paraphrasing, apologies if it’s not an exact quote!)A lot of truth to that!

  30. S. Pandya

    There is a pithy quote from a recent Bollywood flick: “Chase excellence and success will follow.”Pretty much sums up the spirit of entrepreneurs.

  31. Adrian Bye

    how did maria thomas do as CEO of Etsy?

    1. fredwilson

      she did a great job but it wasn’t as mission driven under her leadership

      1. Adrian Bye

        interesting response, thanks. maybe similar to what we’re seeing at twitter now too?

        1. fredwilson

          Very different

  32. Michael Lewkowitz

    Right on. It’s purpose and passion that drives us and progress that fulfills us.Our organizations are increasingly dependent on exceptional contributions from individuals doing work that is more complex and ambiguous than ever before. We’re not just cutting cookies anymore.In that context it makes even more sense that ‘missions’ are at the heart of the best collaborations… at the heart of the collaborations that lead to the game changing results. If you want incremental focus on metrics. If you want exceptional focus on missions.And in that, I believe, lies a monster of an opportunity.

  33. Team Liquid Fare

    A mission of innovation vs a solid revenue model is the “chicken or egg” paradox of a start-up. Blog-away debating a mission statement of “changing the world” vs “taking over the world”. Great start-ups should be attacking both. @jonzanoff

    1. Dave W Baldwin

      True. It then comes down to true character via what you would do once you take over.

  34. scott crawford

    One man’s “alternative mission” is another woman’s reason for getting out of bed.

  35. Gregory Magarshak

    Man I am getting addicted to reading avc.com :)The most fulfilling business is the one that solves a problem the entrepreneur is passionate about. It’s also the kind of business the entrepreneur won’t want to give up control of so easily.You can tell if this passion is there by the business model, too. If the company plans to make revenue “with ads”, then it hasn’t hand-crafted an experience for people who have the problem they are solving. If they do, they often find these people are willing to spend more money in the process of using the website than by clicking ads which are peripheral to what they are doing.The best example I can give is facebook vs google. Facebook has people doing social things, but their ads are on the right and peripheral to their experience. Google solves the search problem, and the ads are integrated into the user flow: you search, you get results, and the sponsored ones are clicked much more often.

  36. matthughes

    Must all other things be equal before a ‘social venture’ has greater value in the eyes of banks and investors?Where is the tipping point?

  37. Denim Smith

    What this boils down to for me is meaningful personal growth through passion and applies to living all of your life in the same way as you describe Etsy’s mission – the passion should come first and usually will drive the entrepreneur towards the problem/ mission/ creation/ product/ impact. Purpose is paramount in having a happy, meaningful and wealthy (vs. rich) life and nothing feels better than living your life by pushing your potential towards a greater cause (family comes to mind as the highest passion/priority for most – which can often lead to most *working for the weekend* and being stuck on the rails which can inevitably impact personal growth and the passion itself). Dis-traction is a word that is often used to describe a moment but carries so much more weight when describing long-term affects over one’s life without said traction. A personal story for another time, but rising through the ranks of investment banking (don’t hold that against me!) from the age of 17, through my high school apprenticeship course, until I founded my start-up last year I saw this all too often in my mentors and colleagues.”How we spend our days is, of course, how we spend our lives.”โ€” Annie DillardIt also brings to mind an inspirational poem I heard at a funeral a few years back and struck a cord with me and became the inspirational backdrop for my start-up that I was already working on. If you click on one link today, please check out The Dash Poem by Linda Ellis: http://bit.ly/hLjI5w

  38. markslater

    that certainly is a scathing article.he sounds like a bit of a nightmare.

    1. fredwilson

      rob is great. i didn’t read the article that way at all.

      1. markslater

        i think Fred to people who don’t know him and read the article it comes off not in a good light.

      2. Larry

        You didn’t read the article that way because you know him. I don’t know him. He does come off that way when I read it. Most people who read the article obviously don’t know him as well.

        1. fredwilson


  39. MartinEdic

    Aspirations and profitability are fine but what really comes across is that, long term, Etsy is not viable for its customers, the craftspeople. I’d like to see customer satisfaction surveying because I know several people who used it for awhile and gave it up as a waste of time. The real problem for handmade crafts as a business is scalability. And Etsy doesn’t deal with that issue realistically.

  40. ChuckEats

    there’s a very real irony when you talk to Etsy sellers who are somewhat successful – and it’s touched on in the article – Etsy by its very construction commoditizes the unique & hand-made.it’s an open transparent market – you can see what others have sold. talk to successful Etsy sellers and they’ll tell you within 1-2 months of unveiling a successful product, there will be 2-3 imitators immediately. prices trend lower & lower – what was meant to be hand-made & unique – becomes commoditized.in the real world, you might use scale to prevent that – that’s against Etsy’s policies.their “release every day” is a great textbook example of a great theory, but it causes havoc with sellers (and buyers.) everyone has built a house on shifting sand – features come & go – as fast as they can be thought up or ruled against. (read their forums for the recent Circles controversy.)the community managers don’t have experience managing communities. perhaps it’s a case of blazing new trails but if you read the Etsy forums, things are often not handled very well.it’s an interesting example for marketplaces – it’s a very difficult problem aligning marketplace revenues w/ seller revenues (the two are at odds) – very curious to see how it continues & the decisions they make.

    1. fredwilson

      i do read the etsy forums and participate occasionallysometimes they remind me of the comment thread we had here the other day on the android post

  41. Boris Fowler

    A company’s mission is what makes it great. Starbucks seeks to improve the coffee experience. Apple wants to improve your technology experience. Google wants to make your online experience faster.Every company should have a mantra.

  42. Jay Janney

    Like anything (e.g. funding, fine wine, multiple wives) too much can be as much of a problem as too little. A passion to solve problems, left unchecked, can create other problems, and potentially destroy a company.Last year I counseled a firm with a nice software product: they had spent as much time coming up with a giving strategy as they did with market analysis. Did I mention they were unaware of four companies who had nearly identical products to theirs? They oozed passion, but thought the fact they were not “maximizing shareholder value” was the reason they had trouble getting funding. The idea that they were late to a market with a “me-too” product never crossed their minds.

  43. Dan Epstein

    Today’s http://startupquote.com/ is on point.Love what you do and who you do it for. The rest will come naturally.- David Cohen (TechStars)

    1. fredwilson

      Yup. Saw your tweet and clicked on it. I love startup quotes

  44. greenskeptic

    Exactly what we’re trying to do with GoodCompany Ventures. Passion for solving a real problem and doing it in a profitable way.

  45. paramendra

    Obvious, if you think about it.

  46. Jan Cifra

    While I agree this is not a new idea – people often forget why they do the things they do. I am currently attending a full time MBA program at Vlerick in Belgium and one of the most important things I have seen in the program was that there is an absolutely tangible link between doing something of value that people want, that solves a problem or helps people do their work better, and value creation. It is when companies forget this link that they get derailed.

  47. Pooky Amsterdam

    You work harder for yourself than you do for anyone else, and I think it is because of the passion behind it, and the goals. By the beauty and fulfillment you receive to make that vision become so clear as to be palpable. Every entrepreneur has found themselves up at 3AM (their time zone) working on something related to their industry / company and not because they can’t delegate, but because they have to know, or deliver and can’t sleep until they do.We all have a responsibility to one another, it is part of the human contract we are born into. Yes doing for others is great, but as my wise old uncle said, “People need rewards for positive social behavior.” I like Denim’s comment that happy, meaningful and wealthy means friends, family and such. If you look at what makes success on a personal level, it is the quality of our human relationships. That is part of being version 1.0 human, and it is our kindness and humanity which is both a mark of civilization and evolution.Then again the observation that Marc started Facebook to expand his social life (Or at least revenge it) reminds me of this quote by George Bernard Shaw – “-The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man.” (or of course women)I am an entrepreneur because I have to be. I must do what I am doing, and that is the key to why I do what I do. I see the future and I must go after it, riding quite hard into that future which has certainly my name in it. Pushing myself because very simply, I must, I do not know any other way now.And I love this blog – this is the BEST commentary on a blog I have come across. As I begin to raise funds for a game changing way to participate in entertainment and ConnectedTV, what I am reading here is inspiring and invaluable.Thank you-

    1. Donna Brewington White

      “…BEST commentary on a blog I have come across…”As someone who has been hanging around here a while, I would have to fervently agree with you, Pooky. And today, your comment was one of those great comments that makes AVC so rich. Really enjoyed what you had to say. Come back.

    2. Denim Smith

      The ‘reasonable man quote’ is my all-time favorite quote – its timeless.For entrepreneurs I would expand it as such:”The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man [convincing (by being persistent) the reasonable men that the unreasonable action will truly create the desired progress or outcome and therefore is actually the most reasonable].”And if that can be accomplished the progress will follow and the unreasonable man will in fact be the most reasonable. Rinse repeat. This friction/ dance is society/marketplace and only limited by our natural laws and environment.

  48. grishel

    Great post.

  49. LukeG

    Just tripped across this quote from John Mackey of Whole Foods:”I always say that the best way to maximize longterm shareholder value is not to aim for it directly. Itโ€™s sort of like if you want to maximize happiness in your own life, you donโ€™t aim directly for it. It comes as a byproduct from having a life full of purpose and love and friendship. Well similarly, the best way to maximize long-term shareholder value is not to aim directly for it, but to put the customer first. Build your business around the customer, because the customer makes the decision voluntarily to do business with you or not. And if you make the customer at the center, then the business will prosper.”

    1. fredwilson

      That is awesome

    2. awaldstein

      Great quote Luke…Putting customers in the center puts everything in its right perspective.This might be of interest @ http://bt.io/GtjZ

      1. LukeG

        Nice post, Arnold. Hard to argue that the edge isn’t moving relentlessly to the center.

        1. awaldstein

          Thnx Luke.The power of this shift from a marketing perspective bears repeating over and over again. It changes everything.As David Semeria said (better than I did) in his comments to another recent post on the intersection of strategy and execution @ http://bt.io/Gtr4:”The old order attempted to mold customer behavior, whereas the new one aims to be molded by it. That’s a huge difference.”

    3. Dave W Baldwin

      On the money. I’ve noticed many become so concerned with projecting their high knowledge they lose track of the more important character in the story…the customer.

  50. Robert Thuston

    Mr. Kalin,I cant tell you how pleasing it is for me to read this article on Etsy that Fred has included. I recently finished reading The Fountainhead by Ayn Rand, and I don’t think I’ve ever met someone who so closely fit the description of the main character “Howard Roark”.If you haven’t read it, you are missing out on meeting several people you would consider your best friends.Carry on,Robert

  51. Youssef Rahoui

    Very true. People do not buy/use a product to help a company increase shareholder value but to get their problem solved.As Says Henri Ford: “A business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large.”

  52. Rayhan Rafiq Omar

    ***”those who are in it just for the money are not the ones to back”. So true.***If that is the case, what do you say to all those people who ‘back’ hedge fund managers, investment banks and venture capitalists?

    1. fredwilson

      many of the people who invest capital for their organizations into our fundsare not compensated very well. they are career employees of retirementsystems and such. they are not in it for the money or they would be workingsomewhere else.

  53. nakisnakis

    The Pipeline Fund Fellowship (PFF) has resonated with women philanthropists because we’re providing another way, in addition to philanthropy, for them to help someone make a positive impact on the world: we’re training them to become angel investors in women-led for-profit social ventures.Thank you for making the business case for mission-driven businesses!

  54. honam

    Which comes first passion or a successful business? The love entrepreneurs feel for a startup is like the passion in a new relationship. Such passion is intense but it can fade away. Just wrote a post on the topic: http://www.blog.altosventur

  55. Peter Evans-Greenwood

    John Kay has the best statement of this in work work on obliquity.As John says in The Role of Business in Society:”I call this paradox the principle of obliquity. It says that some objectives are best pursued indirectly. I owe the phrase to Sir James Black, the chemist, whose career illustrates the principle in action. Black made more money for British companies than anyone else in the history of British business, by inventing beta-blockers and anti-ulcerants. The first he discovered in the laboratories of ICI, the second in those of Smith Kline French after he had decided that ICI was more interested in profits than in chemistry. To quote Black ‘I used to tell my colleagues (at ICI) that if they were after profits there were easier routes than drug research. How wrong could one be?’ The attempt to pursue profit too earnestly is pharmaceutical research defeated its own objectives. We are all familiar with one application of the principle of obliquity. While Americans, characteristically, talk of the pursuit of happiness, happiness is rarely best achieved when it is pursued. Research in social psychology confirms our intuition and experience.

  56. Peter Beddows

    First, I completely agree with the notion that a mission based business – where the mission is real and not just a marketing ploy – that has people involved with passion for the mission and for the customers is a business in which to invest before any others given that there is a market for their production. However, I would like to throw some light on another theme that has come up here in this thread and others relating to Etsy.Since I have not studied how Etsy contracts with its sellers to understand how any arrangements are made between the parties in determining what prices to set for products presented and what split – between Etsy and the seller – is applied to the revenue generated by a sale, I may be in danger of jumping to an erroneous conclusion in my understanding of the Etsy business model so I am prepared to be corrected if what I conclude here is off-base.My wife and I, over a good length of time, have come to know a number of gifted “Crafts People”: We have talked to many of them at various Farmers Markets, street fairs and even in their local stores/workshops where those exist and typically we talk with them about how they do business.As another reference source, my first wife who, in her “former career” was a highly regarded, accomplished ICU and OR Nurse in the UK and the US gradually turned her latent hobby in Enamelling and Water Colouring into her post-career occupation, gaining certain recognition for her works and leaving hospital work behind. She is very unassuming about her accomplishments in these skills as are many of the other crafts people we have met.From this awareness, it seems possible that perhaps the real reason that so many sellers participating in Etsy are not making any real money could be as much because so many of them see “money” or profit not in terms of a winning score card or something to chase per se: In fact, money is the last thing they have in focus. This mistaken / misplaced sense of often false humility underlies reality for many crafts people such that that they cannot, and do not, place real “economic value” on their “production”: They have no sense about what would constitute realistically economic terms for their production ~ hence they end up being in “hobby” rather than being in “business”.Ironically therefore, if it were not for outlets such as Etsy, many such producers would have no other practical way to get their production before any audience never mind before a potentially large audience of prospective customers. Hence Etsy and, perhaps 10,000 Villages (mentioned earlier in this thread) provide a much needed beneficial service to such producers.Thus the key to helping the “hobbyists” move towards being “businessists” – ie: towards making a real return on their productive efforts – therefore would seem to be in somehow helping them learn how to “value” what they produce in more realistic market terms or to otherwise help them recognize and accept that there actually is no viable market for their products at any higher price point than the one they have adopted at which their product has been found to move. In other words, while possibly a higher price might be a “viable” price for them as a producer versus their cost of doing business ~ that higher price would no longer be attractive enough to snag any buyers.

  57. Nick

    I think one has to be in it for both the money and the bigger mission. It’s just too much time and effort to make a project successful without having both of these as driving factors. For me it alternates as to which is the most important on an almost weekly basis.

  58. Terry J Leach

    It’s not sexy! That’s what I have been told about my problem/mission business model. Since when is it not sexy to succeed by helping others succeed? I’ll only talk to potential investors who get it. I believe mission based businesses are more likely to create a sustainable ecosystem that they can grow and profit from for years to come because we cater to the needs of our customers.

  59. vruz

    I think my first post here was back in 2003 or 2004, when you were just starting to figure out this blog thing.I can’t find it now, but it was something roughly like this:People who are in it for the money only, they come and go. And they do go out to seek other opportunities in different industries when they perceive they have better chances to cash out more quickly in other industries. If that works for them, good for them.Those who were born with a flow of bytes in their veins always stay.The latter tend to be the ones with the war scars and determination to win, not just because it’s profitable, or because it’s a good industry to be in, but because things simply couldn’t be any other way for them.Just like you couldn’t talk a sailor into searching new opportunities mining the Sahara.Not in a downturn, not ever.

  60. Adrian Meli

    Couldn’t agree more with this post, but I was surprised by Rob’s answer when reading the article. As you point out he is creating a lot of shareholder value and i have seen many entrepreneurs in his position reply “the best way I can create shareholder value is by focusing 110% on my customer and end market.”

  61. JohnRichardBell

    Enjoyed the post and the link. I’ve always viewed money and shareholder value as an entrepreneur’s scorecard but never a day-to-day one and never one to take priority over the vision. In my experience, the thrill for most entrepreneurs is in creating, building and growing. Kalin has got that in spades.

  62. Will Jimerson, Musa Capital

    When you live in an African village without access to potable water, electricity, a job, or education for your children, then money to make those facilities available to you is very probably more important than most other things in your life – and it certainly helps if the private equity and advisory firms that bring money into your community have at least a little passion for the worthiness of the funding of projects that they are doing. Clearly, private equity firms involved in emerging markets, as we are, have to create a return for their clients. The great news is that, in Africa, those returns can be quite spectacular. It is, after all, the final investment destination. But, if you don’t have the passion to get hands-on involved in the projects in which you’re going to invest, so as to provide financial fundamentals where no-one knows such things exist, then your returns will be zero and the community stays without water, electricity, jobs, and education.Making money is, indeed, the point. But passion is the only way to get the money made.

  63. LIAD

    I agree Charlie. I’ve mentioned here many times that passion for a problem is paramount to success in solving it.I just wanted to state that mission based businesses aren’t a walk in the park. Aiming for one target is a lot easier than aiming for two, especially if they’re in opposite directions

  64. LIAD

    a mission of only using fair trade products, a mission to minimise your environment footprint, a decision to pull out from china based on their human rights record. – all very worthy causes and all can have a very real effect on the bottom line.

  65. Dave Pinsen

  66. awaldstein

    “Greyston Bakery in Yonkers, for instance, has a motto: “we don’t hire people to bake brownies, we bake brownies to hire people”.Thanks for this one Charlie. It’s a keeper.

  67. RyanComfort

    It would be interesting to know how going through the process and becoming a B Corporation would impact valuation in the eyes of the investor community. Would it be viewed positively, because the company would be defined as a mission based business or would there be concerns about management’s willingness to monetize, particularly in regards to exit opportunities? Have there been any examples?

  68. Tereza

    You are mixing up mission with strategies. Those are not missions.A mission is the business’s reason for being, and it necessitates (if through implication) Who you’re serving and what change of state you’re delivering them when they engage in your business.What you list are ways they might deliver what they do. But they’re not the reason for being.

  69. ShanaC

    Is that sustainable. I keep thinking back to some sort of sears- robucks issues- what is the point of a bakery if the average employee isn’t a buyer at that bakery (luxury baking). And can it scale?

  70. Dave W Baldwin

    I give big thumbs up to what you guys are doing Charlie. In the end run, it is a matter of pursuing the worthwhile mission, serving all boats.We can increase the workforce with the more creative and talented by giving those creative and talented something to aspire to during the formative.Per the blame game and all the waste resulting, “It would be so much easier to save the world, if the world wouldn’t make it so damn hard…”Bless you.

  71. ShanaC

    And I just realized that Magnolia’s is getting close to 16 years. Thenagain, I tend to find most nonsupermarket baked goods more of a luxury itemthan not…

  72. Dave Pinsen

    Again, I’m not against the business model. I’m just for being honest about how it shakes out.

  73. fredwilson

    That Inc piece was not fawning

  74. Dave Pinsen

  75. Dave Pinsen

    I wasn’t referring to the Inc piece, and in any case I deleted the “fawning” bit from the comment above.________________________________

  76. fredwilson

    I love it!

  77. fredwilson

    The negativism around Etsy has some basis but it is overblown

  78. Dave Pinsen

    The negativity has been in response to the smugness about it.________________________________

  79. fredwilson

    Rob has been thinking about this problem for a long time. Problem is wheredo you draw the line? Do you let sweatshops sell on Etsy

  80. blsavini

    This post might be a bit “choppy in appearance”. My computer just blipped out and I don’t see a preview button, nor can I figure out how to get scrolled down to the bottom portions of the post.I sell on Etsy. Three of the main reasons why I am detrmined to build up an online presense are:1. I have a handicapped younger sister. My mother’s health is failing and I NEED to establish an at home business, for my sister’s sake.2. After doing some form of physical work or another, my entire working life, my back, knees and hips are toast. Office work always seemed to just make a clock stop dead in its tracks.3. I know that my personality is not main stream enough to be a good fit, in most traditional business settings.I have discovered that there are quite a few online sellers that could fit within one of the above. Venues present affordable means to even attempt to get something off the ground.Would there be any potential business tax credits, partneships or govermental grant opportunities that Etsy the company could encompass to help the already present seller base that may have physical disabilities, or have shouldered the burdan of being caregivers, or don’t meet the “mainstream” psychological criteria? OR even mainstream capability areas that “we” tend to take for granted.My sister is developementally handicapped, and this portion of society, in alot of ways is still “being hidden in attics”. She was involved with one of the workshop’s in our area, years ago, and my mother finally yanked her because injuries were beginning to occur within this particular workshop. PLUS the ‘workers”, in my oppinion were being exploited to a certain extent by companies that paid piecemeal wages in return for tax advantages.Years ago I was a manager for a Burger King franchise group. The owners did hire quite a few developementally handicapped people. I’m sure that part of the reasons were to gain the tax breaks. They also gave jobs to people at minmum wage, which is alot more money than my sister ever saw within the workshop setting. Caregivers got breaks, the workers got real paychecks, and a bit of dignity, which probably trumps all.These owners also worked with a group home/ school for emotionally troubled kids.I currently sell vintage within Etsy, but am also a trained florist. To sell a creation, is an instant morale/ego boost, from the “ooh, that’s beautiful”, comments that usually accompany a sale. Along with whatever monetary angles that you guys are envisioning, there are already needs that could be worked with and have the end results of enriching alot of lives, be true cooperatives, and create some seriously kick a** PR for the site. There are many approaches that could be applied without thinking sweatshop.I’ve also seen past posts that brought up the possibilities of Urban Renewal. AND saw a house sell for $2,300 on Ebay a couple of years ago in Detroit.As a manager, I found that if the pace was kept a bit slow, and if “I” stayed calm, the capabilities wound up being much higher than what I had initially believed possible.