For their second act, the founders of “Total NewCos” are reaching for far more than a payday.
You had a good idea, and you started a company around it. You hired a strong team, nearly killed yourself for years, and despite numerous failures along the way, you made it work. And now you find yourself at the receiving end of our nation’s most fabled business narrative: Your company has been acquired for a princely sum, and you’re wealthy enough to retire.
Now what?
You’re still young — and still have the mindset of an entrepreneur. What to do?
As the Valley increasingly comes to terms with its new role as power broker across an ever larger swath of society, a remarkable trend has emerged: A small but growing group of the Valley’s newly wealthy founders are eschewing the traditional role of philanthropist, and instead have jumped back into the role of entrepreneur. Instead of pledging their money to social causes — the path of Rockefeller, Carnegie, and Gates — they are investing their time and their talent to create change through the vehicle they understand best: the startup. But this time around, they are tackling some of society’s most intractable failings. Consider:
- Western economies operate under the crushing weight of ever-more constrictive consumer debt. With Affirm, Max Levchin (a co-founder of PayPal) wants to eradicate it.
- A cure for cancer has evaded the best scientific minds for more than a century. But Jeff Huber (an early engineer at Google) and his team at Grail believe they can crack cancer’s code, and change the landscape of human health along the way.
- A crisis looms as Boomers age and their children struggle to provide for them. With Honor, Seth Sternberg (founder of Meebo) hopes to rethink elder care and reimagine the role of seniors in our society.
- Less than half of US high school graduates are proficient in math or reading, and half of all dropouts end up in prison. Max Ventilla, who sold his startup to Google, is three years into AltSchool, a radical rethink of education with a goal of enabling “all children to achieve their full potential.”
- Financial markets are rigged to reward short term thinking and the extraction of capital for an increasingly small number of wealthy shareholders. Eric Ries, who founded the lean startup movement, has thrown himself into building a better way through the Long Term Stock Exchange.
- One-quarter of Americans eat fast food each day, but the habit is literally killing us, and driving an epidemic of disease and a crisis in sustainability (meat-based fast food is a major contributor to climate change). With Eatsa, David Friedberg (founder of The Climate Corporation) wants to prove that fast food can be also healthy, tasty, and affordable.
- And of course there’s Elon Musk, who after co-founding PayPal has set out to not only transform transportation (and the power grid) with Tesla, but also space travel with SpaceX and energy production with Solar City.
These are all examples of what we’ve begun to call “Total NewCos” — companies that are not only mission-driven (as are all NewCos), but have also chosen to systemically tackle some of society’s most pressing and seemingly insoluble problems. All believe that nothing less than a fundamental rethinking of their chosen problem is needed, and all leverage the platform approach of technology to do it.
A small but growing group of the Valley’s newly wealthy founders are eschewing the traditional role of philanthropist, and instead have jumped back into the role of entrepreneur.
None of these companies are charities — they’re all for-profit, and they’ve raised impressive rounds of funding from stellar venture firms like Andreessen Horowitz, Founders Fund, and the Emerson Collective. If they succeed, they will demonstrate that it’s possible to not only reinvent our approaches to massive industries like food, health, and financial services, but also create investable businesses within them.
Forging this new approach won’t be easy. But these companies are the bellwethers of a larger movement toward a “fourth sector” in our economy — new kind of companies driven as much or more by purpose and social benefit as by profit or returns to shareholders.
That’s why it’s so encouraging to see so many accomplished founders taking a second tour of duty as leaders of NewCos. For them, success will be measured both by the social benefit their companies create as well as by the profits they capture. “These kinds of companies are hard to create,” said Jenny Stefanotti, a former Google veteran who is working with Asana co-founder Justin Rosenstein to launch an organization in the space (Stefanotti is also living the story — her husband runs AltSchool, where she has also consulted). “Though they generally represent significant business opportunities, most entrepreneurs wouldn’t do them without also being mission driven. There are far easier ways to make money.”
Stefanotti has another phrase for this breed of company: Extremely world positive. It’s a sentiment that’s catching on in the Valley — “world positive” is the tagline of Ev William’s venture fund, Obvious Ventures and it’s echoed in the mission of Chamath Palihapitya’s Social Capital fund: “To transform society by using technology to solve the world’s hardest problems.” (Palihapitya was an early Facebook executive.)
The Valley needs these companies — they represent a potentially powerful antidote to a toxic narrative that’s been building these past few years: Valley companies are rapacious data merchants, trading our privacy for profits and extracting capital for a new generation of plutocrats — at the expense of middle-income wage earners who are becoming expendable “on demand” cogs in a soon-to-be automated future of driverless cars and flights to Mars (for those who can afford to leave).
So yes, I’m rooting for these Total NewCos. I’m hoping they not only succeed, but thrive, and inspire a new generation of entrepreneurs who demand more from their companies than a Unicorn exit and a congratulatory keynote at TechCrunch Disrupt. As I wrote earlier this year, it’s time for the tech industry to mean more than tech. It’s on us to create an ecosystem that gets us to a better place.
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