We need Community-first startups, not Venture-backed unicorns for our better future
The current?Venture Capital (VC) model is fundamentally broken. Driven by maximizing shareholder profits, it focuses on high unsustainable growth, and materialism pushed through our throats that is not good for the world.?Instead, we need to build companies driven by compassion, empathy and care for the people and the world, whose goal is to maximize positive impact and helping us live life in sync with the nature.
There is a norm among entrepreneurs that?raising money = success.?Founders start talking about funds raised fromVC funds as if they are already super successful.?Yet the truth is that most companies raise money because they are not financially sustainable, i.e. they burn way more cash than they earn.?The VC money becomes necessary evil for the survival of the company.
However, VCs are interested in making global behemoths that create monopolies in their industry?— they want the company to kill their competition, and return x10–20 of their initial investment.?The ideal strategy is: Pump a lot of money, burn cash, get new users (through hook or crook), incentivize them to spend more (something called 'mindless materialism'), kill all their competitions (buy or bankrupt them), and then create a monopoly that users are forced to use.?Such a growth model is not good especially for the world which is already plagued through overutlisation of resources.
In addition, the VC model leads the startups to
There are many such examples, like Fast, a one-click checkout startup that raised $100M in 2021 at a valuation close to $800M, while only generating $600,000 in revenue during the period. They hired 700 people, went on to burn cash like anything, and had to close within a year firing all the employees. Perhaps if they had not gone on this non-sensical growth path, Fast could have become a valuable company for many of its users and customers. And there are many examples like WeWork, Robinhood, etc. On the other hand, companies that did succeed through VC funds ended up becoming monopolies like Facebook, Amazon, etc, without any competition and thats is not good for the world either.
The question that every founder needs to ask: Is this a model I want to follow?
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Alternatively, what is a community-first venture?
A community first venture is one that puts community first. The community is the stakeholder — the community does not have to be only customers or users but anyone who can benefit from what the company is doing. What unites the community is the shared vision and mission of the venture. Everyone in the community feels invested in the company as if they are shareholders.?The members are not bought by giving discounts but are incentivized, both extrinsically and intrinsically, by?meeting their expectations, aspirations, and?desires. In such a model, the members are self-motivated to help grow the company because they feel part of it and want to share with others. The growth is completely organic through the support of the community.?The key to building such a startup is
All of the above creates a sustainable growth model which is good for the world as well as for the people.?The community members remain loyal to you while at the same time, the company needs to remain loyal to the community and the world.
What kind of world do we want to build?
The question that every founder needs to ask.
What kind of world do we want to build and be part of? Do we want to build a world with hyper-growth startups straining the natural resources driven by consumerism? Or do we want to build a world where the demand and supply are balanced, and where we do not have to artificially create the demand? Do we want to build global monopolistic behemoths? or do we want to?build sustainable growth companies which are always in touch with their community, doing good for the community, constantly adding value for the community, and the world?
The choice is yours.
This article is inspired by the experienced we had building Omdena (https://omdena.com/), a bottom-up collaborative platform whose goal is to build AI solutions for impact. Omdena is also a community-first startup.
Keynote Speaker | PhD in Computer Science | Founder and Manager | Research Supervisor at Deep Space Initiative | Senior Data Scientist | Consultant | Lead ML Engineer at Omdena | Journal Editorial Board Member
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Experience Research, Strategy & Design | Advisor | Mentor
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Methods Engineer | AI Practitioner
1 年Empowering everyone to know the facts and choose their path is one of the best model as I understand and Omdena does indeed empower its community stakeholders. Well done.
Software Engineer || Cyber Security Analyst - Attack and Defense || Project Manager. Helping businesses build brands, design and integrate softwares that meet the latest technological requirements and functionalities .
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Highly interested in people (Super Empath) | Product Management Intern | Artificial Intelligence Enthusiast #Octavian ??
1 年Well said