Working with Purpose, Forever

https://hakaimagazine.com/news/working-with-purpose-forever/

by PaulHoule • 2 years ago

122 68 2 years ago

A Perpetual Purpose Trust (PPT) is a legal and organizational structure that allows a company to operate with a focus on achieving their overarching goal of creating purpose or impact rather than focusing on maximizing profits alone.

Patagonia and Bosch are the well known examples of this ownership structure.

actionfromafar• 2 years ago

Maybe Zeiss too?

arethuza• 2 years ago

Possibly even better, the Zeiss Foundation seems to fund wider science and teaching using the profits from the companies they own:

"Carl Zeiss AG and SCHOTT AG use the dividends to promote science and teaching in the fields of mathematics, computer science, the natural sciences and technology."

https://www.zeiss.com/corporate/en/about-zeiss/present/facts...

shmageggy• 2 years ago

As mentioned in the article. Anything to add?

Thorrez• 2 years ago

How about OpenAI?

nivertech4• 2 years ago

The transaction was financed by a lending institution that helps support alternative ownership models

I guess this lending institution isn't altruistic, so the founder essentially moved control of their business to them.

lmm• 2 years ago

In theory the trust structure limits their control. They will presumably get repaid out of future profits, but won't be able to change the company mission (at least, as long as the company is able to keep paying what it owes them).

In practice, who knows how much that will hold up. I remember Etsy adopting some kind of benefit corporation status with great fanfare, only to quietly abolish it a couple of years later.

sdenton42• 2 years ago

Presumably there's a business loan with a fixed contract and terms. That's a very different situation than an open ended commitment to maximally enrich shareholders... Pay your bills and the lender has nothing to say about how you run the business. Don't pay your bills, and the contract (which everyone signed) says what happens.

nivertech4• 2 years ago

Simultaneously achieving two goals (supporting the local seafood industry and making a profit) is much more difficult than achieving a single goal - making a profit, so the likelihood of failure is high.

david_shi• 2 years ago

It would be interesting to see DAO's take on the mantle of websites and other projects that have similar trajectories as Local Ocean Seafoods.

The code would be able to facilitate payments for things like hosting and basic web maintenance in perpetuity, where otherwise the site would be dead forever.

bawolff2• 2 years ago

This sounds like just a fancy version of a co-op, which has been a thing for a very long time.

amelius• 2 years ago

A thing where? Afaict, no IT company I ever encountered in real life was structured as a co-op.

EDIT: found this list: https://github.com/hng/tech-coops

bawolff2• 2 years ago

This article isn't about an IT company either. Most tech start ups are VC funded, which isn't the most compatible with a Co-op structure.

BoxFour• 2 years ago

Those two organizational models are fundamentally different. The PPT is a top-down approach which sets firm company values with little room for deviation, ensuring consistency but limiting individual input (admittedly mostly executive/company officer input).

In contrast, the co-op is a bottoms-up model which empowers every employee to have a say, making the company dynamic and responsive to collective decisions.

While both might aim beyond just profits and share goals like amplifying employee voices, their execution is markedly different. For example, in an employee cooperative, major changes can happen quickly through collective decision-making. Conversely, in the PPT model, even unanimous agreement on change could be denied.

As a thought experiment, imagine what would happen in both scenarios (co-op vs PPT) if every single employee (including executives/company officers) decided they didn’t want the business to buy local fish anymore.

ubertaco• 2 years ago

To extend the thought experiment further, imagine if, in the co-op scenario, a survey was run to collect information about whether employees still wanted the company to buy local fish...and then the employees who didn't were slowly whittled down to a minority through selective firings.

The tendency for the most ruthless in leadership to "take the wheel" by excising any from the organization who aren't on board with increased ruthlessness is a common one (see the current GOP in the US, various stories of Soviet leadership, and common trends in executive-turnover-immediately-preceding-layoffs).

perilunar2• 2 years ago

Call me crazy, but the idea that a company can be formed with no purpose other than to make a profit strikes me as somewhat perverse and malign. All companies should exist for a specific purpose, and when that is achieved (or no longer needed, or no longer possible), they should be wound up.

richrichie• 2 years ago

I think you need memorandum and articles of association to incorporate a company in most places. And those documents state the purpose and type of activity the company can engage in.

thfuran4• 2 years ago

But I don't think they're typically the sort of thing that would ever be finished, unless maybe the entire industry becomes obsolete.

ActionHank2• 2 years ago

VCs only want profitable companies so that they can get that sweet sweet exit payday. CEOs of larger, listed corps are competing in the same markets as startups and so are forced to pursue the same or risk looking like they're failing in the market.

Ultimately everyone(customers, employees, the company, longer term investors) loses except the investors who are able to influence the company's direction and priorities.

williamcotton• 2 years ago

And in a world without value investing then everyone loses.

Profitable companies must be providing valuable goods and services to customers.

In the long run the customer is king.

troupo• 2 years ago

VCs only want profitable companies

In the US at least this hasn't been true for a very long time. You only have to look at "YCombinator Top 100" to see multiple companies losing hundreds of millions and billions of dollars of investor money for years

pyinstallwoes3• 2 years ago

VCs also incur risk. The only reason you're able to use a computer today is because of VCs.

PeterisP5• 2 years ago

You can form companies with all kinds of specific purposes, however, if you want to attract investors (or even attract general public investment by being a publicly traded ompany), then don't be surprised if most investors want to invest in companies whose explicit purpose is making money for the investors.

stemlord• 2 years ago

Yes the system is broken

fsflover3• 2 years ago

If you actually want to dedicate your company to a purpose, it should be something like this: https://en.wikipedia.org/wiki/Social_purpose_corporation

throwaway22032• 2 years ago

Literally every job I've ever had I've done with no purpose other than to make a profit.

It's up to the people buying my labour to decide whether it's useful for them, we're not all the same.

01HNNWZ0MV43FF• 2 years ago

But if you're pivoting it seems like a waste to wind up the company and restart it with the same people and resources. A company is just a legal name with legal powers attached to it. Why add purpose to that?

thfuran4• 2 years ago

Why create it in the first place?

NoMoreNicksLeft4• 2 years ago

If companies and persons are legally equivalent, I'm not sure why this is so perverse to you. There are many people in the world who do not have "purpose", their personal philosophy is that they need/want to go out and "make a profit" so that they can survive. Are they perverse?

A company isn't perfectly equivalent to a person, but does exist as a tool so people can accomplish goals. If two people have no calling, have no passions, and they start a company that expresses their personal goals of survival, what's wrong with that?

pixl973• 2 years ago

I'll believe that companies are the legal equivalent to persons when Texas executes one of them.

perilunar2• 2 years ago

... exist as a tool so people can accomplish goals.

Precisely. Companies exist so that people can work together to accomplish goals that are difficult to accomplish separately. I'm suggesting that 'make money' should not be a sufficient goal. Companies are not a natural thing — we decide the laws that govern them.

xjay• 2 years ago

Alan Kay mentioned this recently at a UCLA talk [1] in February. It's known as the "The Friedman doctrine" after the American economist Milton Friedman.

A) Milton Friedman: Shareholder profits > All. "...the social responsibility of business is to increase its profits. This shareholder primacy approach views shareholders as the economic engine of the organization and the only group to which the firm is socially responsible. As such, the goal of the firm is to increase its profits and maximize returns to shareholders." [2]

B) Peter Drucker: Customer has primary focus. "A company's primary responsibility is to serve its customers. Profit is not the primary goal, but rather an essential condition for the company's continued existence and sustainability." [3]

[1] https://www.youtube.com/watch?v=dZQ7x0-MZcI&t=5205s

[2] https://en.wikipedia.org/wiki/Friedman_doctrine

[3] https://en.wikipedia.org/wiki/Peter_Drucker

PeterisP5• 2 years ago

Company's continued existence and sustainability isn't necessarily a terminal goal or a valuable thing; most industries aren't growing eternally but eventually reach a decline, and in certain cases the best way to handle that is to exit that industry while you can still do it effectively - milking the company dry and then shutting it down while you can get a good deal for its assets, instead of losing most of its value while slowly agonizing in a declining market to try to continue its existence until you can't and it gets shut down after bleeding all its reserves.

rldjbpin• 2 years ago

you can chalk it down to survivorship bias but most companies don't always end up succeeding in their original mission. if the likes of samsung and netflix stuck to their original purpose and stopped operations, we would not see the impact they've created today.

pyinstallwoes3• 2 years ago

How would you incentivize an AI to "work towards" goals universally?

c1sc02• 2 years ago

From TFA: "By that time, though, Anderson was the sole owner, and she was tired. She was looking to sell and get out of the restaurant grind."

I've been looking into this for a project of mine & most of these transitions to a purpose-based company seem to happen at the end of the road. I'm really curious to learn if anyone know about projects who start like this from inception.

hooverd• 2 years ago

This is just the Shirky principle on steroids.

Working with Purpose, Forever

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