Are you a Builder or a Grower?

In his recent viral essay, venture capitalist Marc Andreessen made his point loud and clear: “It’s time to build.” 

Andreessen argues that building is what has set America apart for generations: “Our forefathers and foremothers built roads and trains, farms and factories, then the computer, the microchip, the smartphone, and uncounted thousands of other things that we now take for granted, that are all around us, that define our lives and provide for our well-being.”

But, he laments, we have our lost our way. 

Why don’t we have faster airplanes, he wonders? Better factories? A healthcare system that works for people? Vaccines for predictable pandemics?

Have we forgotten how to build? Have we lost the will? Have we become complacent

Andreessen’s answer to these questions is yes: “You don’t just see this smug complacency, this satisfaction with the status quo and the unwillingness to build, in the pandemic, or in healthcare generally. You see it throughout Western life, and specifically throughout American life.”

I agree with Mark. We do need to build. It’s also an ironic exhortation coming from a guy who has dedicated the latter half of his career to financing companies in a way that incentivizes them to focus not on building, but on growing.

Building versus growing. They sound pretty similar. So what’s the difference?

Builders are focused on solving tough problems and making the world a better place. For Builders, solving problems in service of a better world is imperative #1. Sometimes that may require or include growth. But sometimes it may not.

Growers, on the other hand, are focused on growth for the sake of growth itself. For Growers – you guessed it – growth is imperative #1. And not just growth, but fast growth. Short term wins. Quarterly results. Higher valuations. New financings. Seven-year exits. 

The chief currency of Builders is solutions. How effectively are we solving our chosen problem?

The chief currency of Growers is financial value. How much financial value are we creating for our shareholders?

And the currency in which you trade affects how you act.

When you trade in solutions, you reinvest last year’s profit into researching better mousetraps.

When you trade in financial value, you reinvest last year’s profits into share buybacks.

The lens through which we see the world matters. And over the past half-century, we have moved from a country of Builders to a country of Growers. Luckily, as we begin a new decade already rife with wake-up calls, we have an opportunity to right the ship and prioritize building a better future over maximizing growth and financial value.

But you can’t talk about building without talking about ownership.

Why?

Because the way that companies are owned and financed dictates how they act.

When companies are owned by investors like Andreesen who demand a 10X return in seven years, they have no choice but to become Growers. 

But if those same companies had owners with long time horizons and more earthly return expectations, then they might find the space and the freedom to focus on building.

Thanks to their unique structure, steward-owned companies do not (and cannot) serve profit-maximizing shareholders. Rather, they are responsible to a purpose beyond share value-maximization, and to benefit their stakeholders.

In other words, steward-owned companies are natural Builders, driven by a purpose to create value beyond the bottom line. 

The fastest way to build a better world is to recruit more Builders and give them the tools they need. And steward ownership might be one of the sharpest tools we have.

So what are we waiting for?

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Originally published at peterkoehler.org/blog/build

If you’re interested in learning more about Steward Ownership, I have two recommendations:

1. I work with Alternative Ownership Advisors – a steward-ownership consultancy that exists to help founders and owners of private companies design and implement ownership, governance, and financing solutions that are mission-aligned, accelerate impact, and protect independence. Head on over to alternativeownership.com to learn more or Follow on LinkedIn.
2. Purpose is a leader in the steward ownership movement. I especially recommend their free booklet Steward-Ownership: Rethinking Ownership in the 21st Century