Not everything can and should be fixed by startups
Entrepreneurs are not our saviours
Entrepreneurs are our new saviours to solve the world's problems.
At least, according to headlines, government policymakers, innovation gurus, researchers of entrepreneurship, and even a course at Harvard Business School.
This is a very risky mantra. I’ll explain to you why with a short story.
The celebrated app to make low-income lives easier
Many low-income Americans face the issue of irregular pay.
“In some two-week pay periods, she had made $700; in others, she had made $90”
There was a startup aiming to fix this: Even.
“It would smooth the spiky incomes of working-class people, for a fee. The initial plan was to sell them a service, costing $260 a year.”
This solution is proposed as a win-win. The workers win, but the founders too:
“the founders of Even wanted very much to help, but thought it best to help in a way that would create some opportunity for them, too.”
$260 a year is quite a lot for people who earn below $20k a year. Are you actually helping them? No. Big no.
The app never accomplished its goals, now it pivoted to a generic B2B SaaS for employees. Still, it was hugely celebrated in certain communities from the start due to the social impact.
This story comes from Winners Take All by Anand Giridharadas
Don’t solve with startups what can’t be solved with startups
Zooming out, what are the problems that startups have solved for us in the past fifty years? Being able to communicate with your distant relatives? Sure. Having access to information all around the world? Yes.
But have they made dents at other, truly pressing issues? Such as world hunger, homelessness, (children in) poverty, and income inequality. There is not a revolution of a startup that conquered world hunger like Instagram conquered our attention.
Are world problems best solved by startups? No. Why? Because startups can only solve a particular kind of problem.
Startups can only solve with can be solved with products
Startups leverage markets to increase the adoption of new products or services. Whatever can be solved with the introduction of new products, can on paper be solved by a startup.
Most startups fail at successfully introducing new products. But if it is a thing startups can do better than others, it is this.
Most dire problems of the world are not solved with products, as with the Even app. Low incomes are not to be solved by startups introducing an app. Unequal wealth distribution is not to be solved by an AI tool.
Products as solutions distract from policies and fundamental reform
Yes, a gazillion startups are aiming to make agriculture in Africa more efficient, indirectly affecting hunger. Many social ventures do good, however, these are bandaids to issues in the fundamentals of our system.
As well intended and generative of attention to issues, startups can be used to distract from true reform that is needed.
I always get sweaty when a politician calls for startups or entrepreneurs to fix the world's problems. Politicians are in control of levers that startups don’t have access to.
Calling for startups to fix everything is not taking responsibility for the privileges that come with positions of power.
Whenever you see a call for fixing the world’s problems with startups, ask yourself if new products are truly the solution.
I’m genuinely curious, what would be the solution or the approach you’d propose to solving those problems then?
Thanks. Never gave this much thought, but it’s very true. Very insightful.