What kind of companies is tech actually missing?
After watching Robinhood seemingly screw the small scale investors it said it was built for, I’ve been thinking more and more about what does ethical tech look like? And who who are we actually building startups for anyways? Who are we building $400 juicers and cars with built in pizza ovens for?
“We have companies that solve the problems of tech entrepreneurs, and that’s it. If we had waited for somebody who was actively on food stamps to start this company, we might still be waiting” — Jimmy Chen of the Y Combinator & A16Z backed social impact startup, Propel
It’s for us, duh. We do the natural thing and solve the problems that are in front of us. And for those of us in tech, it’s often that we want someone to serve us better juice and hotter pizza, do our dry cleaning, and build us the 100th analytics tool to use at work. But in doing this, we’re missing huge opportunities.
So, what kind of startups should we be working on?
Having helped scale DoorDash in San Francisco and now living again in Brazil, it’s clear that the problems are totally different in each place (they deserve an article of their own), but our approach is the same —build tech for high income users with venture funding from SoftBank, Sequoia, and Goldman Sachs. Where is tech middle America, the inner cities, and low/middle come users?
Before you say “woah wait… I work in tech, not for charity”, hear me out.
What I’m advocating for is something in between working for a ‘non-profit’ and a ‘profit-at-all-costs’. It’s a concept that the Nobel laureate Muhammad Yunus called “Social Business”. It’s like a B-Corp on steroids. Unlike a profit-maximizing business, the prime aim of a social business is not to maximize profits (although generating profits is desired). On the other hand, unlike a non-profit, a social business is not dependent on donations or on private or public grants to survive and to operate, because, as any other business, it is self-sustainable.
“A charity dollar has only one life; a social business dollar can be invested over and over again.” — Mohammad Yunus
This “social business” framework is important because I think is the best way to deliver impact billions of people while avoiding becoming exploitative. But rather than tug at your heartstrings, let me instead convince you as a fellow business person:
Market Sizing
The US is huge to us but on a grand scale, we’re kinda small. We make up just 4.25% of the world population. So most of the world lives outside of the US and access to tech is growing at breakneck speeds (in 2020 we hit 3.5B users with smartphones).
4/5 of Facebook’s top countries lie in the developing world (India, Brazil, Indonesia, and Mexico) and so we’re already “exporting tech”, but people want more than just social networks. It’s access to quality education, greener energy, better banks, more efficient logistics, more productive farmland, and the list goes on. Where is tech for small scale farmers, single parents, and the planet?
There are 500+ unicorn startups, of which most specifically target higher income users. But I could probably count on 1 hand the number of unicorns that build products specifically for low income users.
Competition
The kind of tech that we’re missing is tech for underserved markets — by definition, we’re not addressing these problems.
It’s not that there aren’t any companies that are working on those problems, it’s that we don’t have enough companies working on these problems.
There is way more green field in these markets. SF tech is way more crowded, you might be 1 of 50 startups working on an analytics tool for enterprise companies. However, if you build tech for job placement of ex-felons or boosting crop yield in rural Brazil, you’ll be 1 of 2 startups (70 Million Jobs, Custo fácil).
Although I wouldn’t say it’s a “social business”, a great example of a company serving an underserved market is DuoLingo. When it came to the market for a really high quality education app, one of DuoLingo’s largest competitors was Rosetta Stone. The Rosetta Stone product was great and so creating a free language app at the time seemed ridiculous. The problem with Rosetta Stone was its user base was small and the product would cost hundreds of dollars per course… Relegating it to the category of “Christmas presents exchanged between upper-middle-class spouses”.
What made DuoLingo seem crazy at the time helped it turn into a largely international user base of 300M+ (free for most, low cost for premium). In terms of contribution to the world, reaching more users and charging each one less is the best way to optimize your impact.
Is there interest in working at these companies?
Let’s be honest. Working at a well funded tech company can be great, but it can also mean squeezing an extra .5% out of a feature that you might not be all that interested in. Solving real problems is just more interesting work. I can’t point any fingers either — working at DoorDash wasn’t exactly charity work 😬 But if anything it made me realize what myself and a lot of other people in their 10’s, 20’s, and 30’s are looking for.
According to the Harvard Business Review, the top 3 things that millenials and gen-Zers value most is:
- Making a positive impact in my organization
- Help solve social and/or environmental challenges
- Work with a diverse group of people
This is exactly why companies like Pachama have no problem with recruiting. Pachama with their plan of replanting forests in exchange for carbon credits generated the most press of any of the hundreds of Y Combinator startups. Not only that recruiting was easier, according to their CEO “it was the easiest fundraise I’ve been through”. Smart investors see it as one of the largest problems and really it’s a no-brainer.
All of this is a good thing in my view. We’ve raised the bar, it’s no longer good enough to work for a company that just makes money.
Why is this possible just now?
The cost of great tech has come way down which “unlocks” a bunch of new business opportunities. Looking at it from the angle of economics, it’s really the convergence of a couple of factors:
- Demand — Pretty simple really, price has gone down and computing power has gone way up. Explains why smartphone penetration in the last 10 years has been like a rocket ship.
- Supply — Cloud computing prices fell by over 50% in the last decade. You can build on AWS and freemium or low cost tools and still build a kickass product for use cases that were previously impossible
So… what should you do?
Something that I’ve found works really well is as simple as asking real people about real problems (this sounds like basic humanity in a bar but oh well). It will yield you conversations about how in Brazil it can take 2–4 weeks to ship something that’s a 6 hour drive… Or that in India 50,000+ people per year die from snakebites… Or millions of people have their mom’s cooking delivered to them every day at lunch.
Next time you’re outside of our tech bubble, listen, write down what you learn, and then start building.
BONUS: So what are people already working on?
Serving underserved populations is often great business, just not quite as profitable as the money presses of Apple and Facebook. There are plenty of examples of companies that pay their bills AND do great things for all stakeholders involved. They may not all social impact tech per-se, but they are solving real world problems:
Organizations
Blue Ridge Labs — An incubator within the non-profit Robin Hood focused on high-impact tech products for low-income New Yorkers
IDEO is a design and innovation organization dedicated to solving challenges in poverty and spreading human-centered design through the social sector. The company enables organizations to create and deliver innovative solutions to challenges rooted in the needs of people. Using the human-centered design process, IDEO works with organizations on projects relating to a variety of focus areas such as health, financial services, sanitation and gender equality
Fintech
Propel —Helping people get the best use of their EBT benefits (food stamps for example) through an app called Fresh EBT. The company allows users to view their balance, stretch their dollar as far as possible, and explore job posts and other money-making opportunities.
Wagestream — Aims to help people in the UK avoid payday loans. The platform let’s employers and their employees track their wages in real-time, stream the money they’ve already earned, learn easy tips to manage money and save their wages straight from your salary.
M-Pesa — Mobile phone-based money transfer service, payments and micro-financing service in east Africa. The ability to transfer money over mobile allows thousands of migrant workers send money back to rural villages that often don’t have banks.
Kiva — Allows people to lend money via the Internet to low-income entrepreneurs and students in 77 countries. To carry out its mission of connecting people through lending to alleviate poverty, Kiva allows microfinance institutions (MFIs) to raise 0% interest capital that they then loan out to users.
Social Impact
Good Call, a hotline that connects New Yorkers who have just been arrested to a free lawyer. They aim to help the 450,000 people in the U.S. that are sitting in jail who haven’t been convicted of a crime but can’t afford to pay bail, or didn’t have access to a lawyer or their loved ones at the time of arrest.
Simprints, Digital fingerprints for people without ID’s to help improve the lives of the world’s poorest. The company builds biometric fingerprint technology for use by governments, NGOs, and nonprofits for people in the developing world who lack proof of legal identity.
JustFix helps New Yorkers by providing access to housing rights experts. It makes it easier for tenants to research landlords, request repairs, respond to evictions, and take negligent landlords to court.
Ed Tech
Yenko warns low-income college students when they are at risk of losing their aid package and helps them to create an action plan. Allows users to track eligibility requirements, indicates aid at risk and delivers recommendations to ensure students stay on track with all Financial Aid sources.
Raise.me is a social enterprise dedicated to expanding access to higher education, particularly among low-income and first-generation students. The company enables students to earn scholarships throughout high school for getting good grades, volunteering in the community or joining an extracurricular activity. Raise.me partners with various universities across the nation including Carnegie Mellon University, Georgia Tech, Syracuse University and Oberlin College.
Green Tech
Panchama — Harnesses AI to drive carbon capture and protect global forests by improving carbon credits. As reforestation is one of the most effective ways to capture carbon in the atmosphere, measuring carbon capture accurately helps companies invest in reforestation efforts
Planet collects geospatial images of Earth via a fleet of satellites that give farmers, scientists, researchers, governments, educators and the maritime industry a deeper look into the globe’s ever-changing landscape. The data captured by these satellites can help farmers to predict crop harvests, climate researchers to measure the impact of climate change and can even help governments to plan cities.
Remix offers a platform designed to empower cities to plan the best possible transportation system. Working with more than 325 cities across four continents, the company helps cities plan transit, envision and design streets for the multimodal city and understand the impact of new modes. Using their own platform, Remix helps cities bring relevant transportation data into one place and visualize it in a way that makes it easy to understand and use.
Revivn is a social enterprise dedicated to repurposing used technology for empowerment and social good. The company collects outdated electronics, such as phones, computers and keyboards, to build out various initiatives to help people gain computer access. Revivn enables companies to integrate sustainability into their strategic planning and reduce the cost of maintaining a technology infrastructure.
RescuingLeftoverCuisine — Millions of people around the globe are unable to get access to food, while countless meals are thrown away each day. We aim to become the world’s most widely used solution for companies and individuals to eliminate food waste in their communities, making food rescue sustainable and universal, and food hunger a thing of the past.
