agreed! well put michelle.

Michelle Goguen said:

"This means that they can measure their social impact directly by their financial profits."

Thanks, Michelle. I think there is much in this idea -- and some potential major challenges, like equating profit with social impact, as people tend to equate wealth with worthiness and value in our culture. I am drawn to the idea, but also realize that many of my great role models, from Gandhi to Buddha, died with nothing and the lack of profit they made in their lives was certainly no indicator of their lack of doing good.

This said, can business and the market do good? I think it must. In fact, it may be the only thing that saves us. There is this wonderful opportunity to balance doing good with meeting self-interest that can potentially create more good. I am with that. I just wonder how not to fall into the trap of basing "worthiness" or "success" on profit, as many of the most quality people I know do not make much of a profit, and some of the people I know who make the most profit, have the least amount of integrity. Can you make a profit and serve the world? Yes. Can you serve the world and not make a profit, like Gandhi or Buddha? I think yes too. So it is great if people can do both, but I think this is a delicate area. Does this also mean that omidyar.net is failing since it does not make a profit? We can start running ads here or charging people. If Onet started to "measure their social impact directly by their financial profits" we would get an "f" I think, as this must cost a pretty penny and is not bringing in any money as far as I can tell. I like it like this (granted, I do not pay the bills) and the lack of profit that Onet makes is not a sign I think of our lack of doing good. Hope this is making sense. I do not mean to take away from the vision (I like it) and I think it may be truly our greatest hope for the future, but I just want to be careful in how it plays out and what other notions might come from this idea.

Soren, you touch on a really important nuance. Profit and positive social impact don't always go hand-in-hand. We believe that business can be a tool for doing good. The deeper distinction we're focused on is when a business can't make a profit unless it creates positive social impact. In that case, the profits become a direct measure of the positive impact created by the company.

In the case of Socialtext, people need to collaborate and co-create in order for the company to be profitable. If collaboration and co-creation didn't happen, the profits wouldn't happen either. In eBay's case, people need to trust each other in order for the company to be profitable. For instance, that would all change if eBay's business model were ad-supported vs. transaction-based. With Meetup, people need to connect over shared interests.

These examples are different from corporate social responsibility, where the profits (however they're derived) are then used to support good causes. That's an after effect rather than the causal effect we're looking for.

Michelle, I do agree with your definition of what a true social enterprise is (inability to exist unless it makes a social impact). However, I think that throwing eBay into the mix is confusing. Are you saying that it is fundamentally a "social enterprise"? That would be news to the majority of its investors and shareholders.

I liked Pierre's quote about markets being an old tradition.

I'm inclined to respond to Soren's remark, but I'm gonna bite my tongue instead (too bad the search engine doesn't allow you to specify feedback ratings -- otherwise I would suggest searching for my most recent "-5" comment).

Two topics heavily remarked in the news (but not here) were "disappointing results" and the shopping.com investment. Of course disappointing is relative. And also of course I would be the last to say that shopping.com was not a wise investment. This domain is no doubt several times more valuable than ebay.com. In fact, I used it as an example of a valuable domain on my FAQ at http://E-Z.Name more than half a year ago.

nmw

Luke, here's how Wikipedia defines "Social Enterprise":

Briefly, social enterprises are businesses which trade in goods or services and aim to make a profit (or surplus). However, whereas conventional businesses distribute their profit among shareholders, in social enterprises the surplus goes towards one or more social aims which the business has - for example fair trade, vocational training for disabled people, or environmental issues.

This is clearly not a description that fits eBay.

However, in order for eBay to be a successful business, people must generally learn to trust each other enough to do business without ever meeting each other. Ten years ago, people were wary of doing business with established brand names over the Internet, let alone a complete stranger.

That is what Michelle is talking about when she says that eBay is a business that cannot be successful without having a social impact.

Social Enterprise, using Wikipedia's definition, can of course be successful without having a social impact -- since that impact only comes after profits are made, and is not a necessary condition of its core success. Nothing wrong with that model, it's just not what we're talking about here.

Interesting distinction, although the line blurs when you consider how eBay is continually used for social benefit -- there are many smaller organizations using your structure for social development projects even if your structure was not designed with that goal in mind.

Almost every interaction I've had on eBay has been buying or selling from charity benefit auctions. eBay changed the way I thought about fundraising back in 1999 when we made more on a small fundraiser of autographed teddy bears than on a mass campaign appeal. Today I occasionally scout around for art supplies for public art displays and we're giving Missionfish a go this week for the first time. eBay has certainly made our work much easier as we gather resources and supplies for upcoming projects.

Perhaps there's better terminology to describe this emerging organizational structure...if not social enterprise then what?

Michelle, thanks for highlighting that distinction. It helps a lot. I hear that many businesses exist with the notion that the doing good comes after the fact or that it done as corporate responsibility, and you all want to show that the making of the money can itself create good. That is truely awesome.

I guess my "charge" comes from what profit means, and working with so many very poor kids who grow up with and are conditioned in our culture to hold the notion of profit as success. Thus as poor kids whose parents are working as janitors or street cleaners, they begin to believe that they are less than because of the lack of profit in their lives, which often brings great guilt and unworthiness. They often do not have as much respect for their parents becaue of this notion, even though their parents can be wonderful hard working people. So it seems, to me, to be a delicate balance of the worthiness of all people, and the emphasis on creating good business that help more and more people. Of course, the more such good businesses can be created, the more these kids and their families can be helped, both in terms of financial opportunities and work that gives people respect.

Soren,

Your post really struck me and I'll try my best to articulate my thoughts about it.

you said: Of course, the more such good businesses can be created, the more these kids and their families can be helped, both in terms of financial opportunities and work that gives people respect. (italics mine)

I don't think the "type of work" one does gives respect. In fact I know it doesn't.

It isn't really our circumstances, but what we make up about them.

My grandfather was a repair man in a carpenter shop his whole life. He had a job with about the status of a "janitor". He worked hard, saved alot, gave generously, and was thankful for the opportunity to have a job at all.

The notion of success and how it's defined runs way deeper than jobs, education or social status. I can think of many who are well educated, have amazing jobs and earn large salaries, but don't "feel" successful.

With the media glorifying excesses and "designer" junk et, al. I can see the struggle of many, not just poor kids...

you said: "they begin to believe that they are less than because of the lack of profit in their lives,"

I think again it goes deeper. It's not the lack of profit, but what they've believe about what profit is. So to me a better job, car, clothes, etc. won't cure the core issue.

There is a lot of respect to be given to the janitor, street sweeper, doorman, car washer, bus boy, who does an honest day's work than some one who goes on welfare because they "deserve" a better job.

Someone has to do those jobs right? I don't think we should look down upon them, in fact some have made multimillion dollar companies on those very jobs!!!

Anyway, I hope I got out what I wanted to say. I just have so much respect for hard working people and think it's a tragedy that some of them have come to buy into the lie that they are less than someone else because of what they do.

Carla, I agree with you completely. I think foremost is respect, but better jobs that treat people with this respect are certainly needed I think, and good pay does not hurt.

of course soren, and a man/woman with a good attitude can find respect in the most "humble" of jobs...

i should know... :) but, i'll have to tell that story another time.

and you know i often think, (a very wealthy man once told me this...)

"always treat those deemed the "least" with as much respect as you do the "president", as without them, we would have no place to have our meetings, no food to eat, no clean bathrooms, etc. they and their jobs are as important as ours, just different."

it made a big difference for how i looked at things.

Soren, :)

you are a "true" Buddhist imo! :), and so was Jesus! :)

Buddha, suggested that all Buddhist's must do something, how-ever large, every day for the society, and in Thailand they do, almost everyone contributes something! In lupini park, Bangkok's poorest area, the people, all, no matter how poor, do something to help thier country, such as keeping a section of the street clean, etc. And it Works!!, in return these people recieve pride, integrity, a feeling of participation and belonging, a far cry difference from the poor of America!!, Buddhism is a perfect social system imo!!

can we do simalar here?-- imo, many do, and always have, Henry Ford is a great example, Ford realized that he could use technology to bring an otherwise luxurious product within the reach of the masses, which helped develop the automotive industry (steel, plastics, oil, rubber, etc) that likely supplies more job opportunities than any other single product.

imo, social development is dandy! :)

and necessary, but social support, while people are hungry is a bit like "let them eat cake", is it not?

Pierre, :)

I am extremely impressed with EBay & Paypal, and I do very much agree with and appreciate the social strides, social commitments and social impacts that Ebay drives, but quite honestly (imo), the "Greatest" thing that Ebay & Paypal do, is distribute money, or IOW's they "create & provide "NEW" job opportunities, that otherwise did not exist"

here lies the answers! imo

social development can only exist with simaltaneous economic development.

I believe that the base answer for ONet has already been discovered, we simply need to copy EBay, we simply need to develop a way that committed social angels can "afford" to do good!!

if we could develop a mechanism that allowed "do gooders" to earn a little income (as EBay does), then we would end up promoting and escalating the good that is done! No?

personally, I believe that there are many, many different venues found along these lines, the one that interests me, is a University of Philanthropy, where the "Social Angels" can earn a percentage of all projects that they can move to success or advancement!

but, honestly, as with EBay, if the dollar is not envolved, we are missing a neccessary resource, No? :)

Best Wishes!!

Brad

I think Soren and Carla and Brad have made good points, which might be summed up as:

Not everyone can be George Bush

(and it's a good thing, too) ;D

nmw

Pierre, I know what you're saying, though I'm not 100% with you (yet). Elsewhere on omidyar.net there have been conversations about the two generations of social enterprise. The first one mirrors the Wikipedia definition. The second one is in line with what you are saying about eBay: where making a profit itself is inextricably connected to creating social good.

When I think about social enterprise, like you I have in mind the second definition.

Not to be contrary (okay, I'm being contrary), but I'm still wary about calling eBay a social enterprise. I'm struggling with articulating why. I suppose it has to do with intent: both the intent in founding the company and also the intent in how the company operates today. The social benefits seem to be by-products of the business, not the core founding or operating principles.

When someone designs a car, they know right from the very beginning that a car is going to roll off the assemblyline (as opposed to a potted plant). That silly analogy is what is keeping me from completely agreeing with your assessment of eBay.

You say it is a social enterprise -- and your opinion matters as founder and significant shareholder. What would Margaret Whitman or Jeff Skoll say? And how about Axa, the TCW Group, Barclays, Janus Capital, and FMR Corporation? (I chose those five since their holdings are more or less equivalent to yours.) My guess is that those major shareholders would say, "Damn good business, chaps. Proves that the Internet can still be profitable."

Okay, now it's time for me to try and figure out why you're so adamant that it is a social enterprise. I think that the key is in what Michelle said: "We recognized the tremendous social impact happening through companies like eBay and Meetup..." The word that pops out for me is happening.

The first generation of social enterprise -- returning profits to pay for social, environmental, humanitarian or other causes -- is very intentional. Someone decides that the business will support those causes. The second generation you are speaking about -- where the good just happens -- is not necessarily intentional; maybe it can't even be.

When you first envisioned eBay, did you see the social benefits? I suspect not, or at least not fully and to the scale that it has attained.

I'm sorry to sidetrack this conversation -- I know that your intent, Michelle, is simply to list the news and stories out there about Omidyar Network. My apologies. These things have been on my mind for a while and I haven't (obviously) resolved my conflicted opinions.

Luke, it must be pretty late over there.

I think if you read again you will agree that neither Pierre nor (apparently) Michelle intend to call Ebay a "social enterprise" -- so there is really nothing to be contrary about:

Pierre Omidyar said:

That is what Michelle is talking about when she says that eBay is a business that cannot be successful without having a social impact.

Social Enterprise, using Wikipedia's definition, can of course be successful without having a social impact -- since that impact only comes after profits are made, and is not a necessary condition of its core success. Nothing wrong with that model, it's just not what we're talking about here.

nmw

Maybe I'm confusing myself, Norbert, but I think that what is being said is that a 1st generation social enterprise can be successful without delivering social impact -- because that social impact comes after the fact. eBay as a 2nd generation social enterprise (whether or not you agree with that designation) would be unable to make a profit unless the social impact occurs first. So, I continue to be partly contrary and partly not.

The way I understand Pierre's comment is that he is not even interested in whether or not Ebay is interpreted as a "social enterprise". Apparently, he is simply focusing on the fact that it needed to and also did "deliver" a "social impact". If it either did or didn't also behave as a social enterprise is a completely different (unrelated) question (as if the two "variables" were completely "independant" of one another). I hope this viewpoint doesn't make things even more confusing than before! ;D

nmw

From what I've read, there were social intentions in creating eBay. Creating a network of independent users who can help each other is, by design, an intentional social impact. And it is no small feat. I believe that was one of eBay's original goals.

I am a firm believer that eBay is a social enterprise for at least three reasons:

1. Democratized access to markets. The little guy got in on the action. Hopefully little guys all over the world will get their piece. Millions of people have been able to launch their own businesses who otherwise would not. Efficiencies are being created in the market that were impossible before. More is needed!
2. Inspiration. The eBay model is being used for charity fundraisers and in new types of social enterprises. It took a for-profit company, with its eventual scale, to inspire new ways of helping people make money for themselves. Teach a woman to fish...
3. Community. The world is smaller when people can trade and communicate with each other regardless of geopolitical boundaries. We need fewer divisions and more contact among people in distant nations.

Assuming eBay expands geographically, all of these things increase as eBay's profits increase.

I know eBay (and PayPal) aren't perfect, but they can't be profitable without doing social good.

+1 that's a superb analysis!

I'm wondering what happened to the "chicken and the egg" issue.

I mean: Pierre was miles ahead of us -- no question.

But what if people still didn't understand how to use a computer? (indeed, in many respects, knowledge is still quite limited) Well, then Pierre would probably be as poor as most other hackers. ;D

When I think about how computational literacy has hardly even reached square one (let alone passed it), I think we should not forget that some educators (the good ones) deserve a great deal of recognition, too.

And let's not forget the dreamers: John Lennon, Martin Luther King -- and so many more who came before and after them...

Did anyone here see the CNBC special on eBay last week? I caught half of it with some of Pierre talking about the development of feedback....there was a bit more dialogue on social impact there but I cannot remember specific quotes.

Can't say the documentary was particularly well-produced but it does tell the eBay story through the eyes of the people as leading the P2P exchange revolution.

I would add a few more positives to eBay's impact. One is that it allows more people to make a living following their interests. There may not be a market locally for someone's interest in say trading cards, but there is nationally and internationally. More people with jobs that allows them to follow their interests has to be a good thing.

The other is that it supports re-using products. My friend uses it to buy cell phone batteries for an old but still working cell phone. The company does not make them anymore, but instead of having to throw her phone away and buy a new one, she simply finds the parts she needs on eBay. I am sure there are more situations like this.

I caught a portion of the CNBC special on eBay. My take-away was that the company was poised for strong growth internationally, especially in Europe and China. If the company's corporate conscience was examined, I must have missed it.

On the related subject of corporate social responsibility, I was told today that Starbucks is frequently the object of virulent protests in its home town of Seattle. Having done some PR work for Starbucks, I have a reasonable understanding of founder Howard Schultz's personal and, by extension, corporate commitment to social causes. Net net: I have come to believe that the coffee retailer is setting the standard on how a company could or should behave.

When I learned about the Starbucks-haters in Seattle (no, not because the brew is too strong), I started to wonder whether any company today was above criticism, or are these critics simply anarchists or socialists who lack a broad perspective on the modern corporation?

Interesting thoughts re: Starbucks.

Coming from the perspective of someone who lived in Seattle for 7 years, I think some of the protest around Starbucks is more that it monopolizes the coffee landscape. I interviewed about 200 people for a 1998 Marketing survey re: the coffee industry in Seattle - most of the folks I sampled had a beef about Starbucks because it took away from the "little guys" the small, locally owned coffee joints that made Seattle so famous. Seattle-ites are pretty darn particular about thier coffee...and some of them simply refused to give Starbucks their business because they want to support smaller chains (Portland based Torrefazione (sp?) and other expresso shops.

My .02, anyway...

We had the same situation in Cambridge/Boston, nestled between MIT and Harvard in Central Square. Once a mecca for marxists and diverse artists, Central gentrified in the 90's and most of the local shops were lost to high rents. When Starbucks moved in it took out three neighborhood coffeeshops within a year -- most could not compete. There were protestors out every day for the first six months in 1998.

Starbucks has done a tremendous job of trying to renovate their image as a green company but I still do not buy their products; we have local organic shops with better service. That "localized" thinking informs most every buying decision because I prefer to get to know the people who invest their time and effort into caring for me. I like to know who made my clothes, my chai and my dinner because I can feel a bit of them as I consume it.

eBay has an interesting model because you can get to know people to some extent -- interactions seem to carry more social capital when a personalized note comes in the box and good feedback is passed all around. ONet succeeds in taking this social investment to the next level by giving value to individual comments and thoughts presented. Not only are people connecting, they are organizing around very similar ideas with tremendous transformational potential.

on small+food:

Diet for a small planet