The Rise of the Activist Founder

How mission led startups are poised to change the world…

“The thing that stands out is the thing that is different”
Marc Andreessen

Silicon Valley investors have changed track and are looking to back Activist Founders.

No longer are VCs looking for the maniacal, hard-driving, near crazy founders of the Steve Jobs era. Today’s smart billions are looking for ‘dissidence’ — disagreeableness, if you like; or, a desire to upend the rules — activism!

“Ego is out…dissidence [or activism] is in”
Marc Andreessen

Why?

Because it’s not only about getting to number one — but, now, staying at number one!

“What’s the number one form of differentiation in any industry? Being number one!”
Marc Andreessen

The path to number one in a new sector is well understood and — in relative terms — ‘easy’.

The hard part has become staying number one.

In particular, think of the rise of Uber — incredible growth catapulted it to the top position in its sector, but the toxic internal management and the poor relationships with city authorities led to very public staff legal action, its ‘freelance’ drivers claiming employment rights, combined with a number of major cities refusing to accept or grant Uber a licence. And, without the ability to attract scarce tech talent, drivers and a positive relationship with the cities where Uber operates, the business was going to suffer.

Or think of the new kid on the naughty step — Revolut — which has seen meteoric rise coupled with high staff turnover due to its historic ‘toxic’ culture along with question marks around its money laundering compliance. Revolut was last valued at around £1.5bn and to reach the £10bn mark, it will need to overcome investors reluctance to invest in the company by clearing up any doubt around these issues.

The Mission Led Path to Number One

The path to number one therefore has to change — from one of pure drive and energy to a mission and purpose led approach. The intention to change the world — for the better — is one that draws support, attracts talent, the goodwill of public administration, gains positive social media coverage and is more likely to sustain its position at the top of an industry sector.

Staying at number one is now the big challenge — and a business that first arrived based on a toxic over working culture or poor compliance, has little chance of staying there without major and rapid change.

Taking a business from £100m valuation to £10bn is where the large VCs know the big money is made and that’s where the large Silicon Valley investors are placing their bets. And to sustain this level of growth, the business needs to keeps a positive purpose and clear explicit mission through that tumultuous growth phase to unite its staff, investors, customers and communities.

Love us or Hate us?

A clear and powerful mission will attract customers, staff and build loyalty — but also, strongly expressed and powerfully communicated, it will also repel some people. That’s okay! A business is typically the number one player with 30%+ of market share — the remaining 70% split among 4 or 5 other players.

So, repelling half of the potential customers is good — if it more powerfully attracts those that support your message and mission. (Okay, I accept that a few exceptions to this exist — Google for Search and Microsoft for Operating Systems — but in broader markets — online accounting or smartphone hand sets, the Love / Hate model works best).

Yes, this is the era of Marmite businesses. Just as politics across Western democracies have splintered into love / hate politicians — so successful businesses are often replicating this structure.

(Marmite is quintessentially English and isn’t available everywhere— it’s a yeast based spread with a strong flavour — people either love it, or hate it).

In today’s climate, it isn’t just ‘okay’ to attract and repel customers — it is an absolute necessity! That’s also why young startups which don’t ‘pick a side’ and seek to ‘keep options open’ so that they can ‘sell to everyone’ are finding it increasingly hard to either be heard or gain any momentum.

Of course, once you’ve picked your mission — don’t mess up! You have to be honest and authentic to that mission and if you fall short, apologise publicly and quickly and mend the company’s ways.

Equally, scaleup companies increasingly need to be conscious of the political or regulator fallout that may follow from the implementation of the new technology. In numerous cases, not paying much corporate tax whilst putting people in legacy businesses out of work is likely to stir a slow but strong response.

The Marmite startup brand gives companies an advantage on social media too — they are positioned in people’s minds as the challengers or the underdogs and they depend not on customers nor members but people evangelising their message to support and amplify their core business.

The upstart political movements are huge users of social media that create emotional impact. Think of Italy’s 5 Star movement — not that you have to love their politics — to begin to see how well the highly opinionated / strongly worded messages play out in our current media environment.

Revolutionaries Need Not Apply

To be clear — Activist Founders are fully paid up capitalists. They are not using force to overthrow a set of rules (legal or social or business practise), but seeking to reform the capitalist model from within.

Nor are they the Activist Entrepreneurs of the 1960s who established counter-culture movements of Head Shops (selling marijuana paraphernalia) or the alternative-movement businesses of wholefood shops (although these have gradually become mainstream) or political bookshops.

The Activist Founder of 2019 is seeking to use equity and capital to build a for-profit organisation that delivers tangible social or business change.

Nor is this Social Entrepreneurship

Nor is the Activist Founder running a social enterprise, where a lower rate of return is offered because the business brings additional social impact — such as a school, training or community business of some sort.

Instead, the Activist Founder is still focused on the high ROI (Return on Investment) that the big money VCs demand, it is just that their purpose or business mission is front and centre of everything they do.

Money making has become the clear bi-product of building a hugely successful campaign, errm… I mean business, rather than the sole focus of the organisation.

It is almost as if the big VCs are saying ‘shareholder returns are no long the focus’ — knowing that investors will make more money backing entrepreneurs who prioritise their mission first whilst keeping a clear and firm handle on the ability to grow and make money.

Empowerment?

What kind of business fits the new Activist Founder model?

Instead of providing an ‘alternative or counter-culture’ solution, these Founders are often focused on giving groups of people a voice who are currently marginalised or excluded from the mainstream without changing the prevailing culture.

These might be businesses focused on empowering children from low-income families into move into STEM subjects and find well rewarded work; or, empowering patients with rare diseases or illness to have a voice in health policy and raise their profile (and needs) to medical researchers.

Or, they may simply be seeking to empower the newbie employee given the grunt job of processing data by the use of artificial intelligence or perhaps empowering people who move country looking for a better job to settle in and to securely meet all the bureaucracy of visas and residency.

Other activist business models seek to help people stuck on zero-hour contracts achieve full working weeks by efficiently providing access to a wider group of opportunities or they may be focused on carers stuck at home without an opportunity to contribute well paid work or generate a healthy living wage.

Many other business missions of Activist Founders are yet to be born…

Is Your Startup / Scaleup Built to Last?

If you might be an Activist Founder — is your startup / scaleup built to last?

Here’s how to know — ask this killer question:

“If your company didn’t fulfil its mission, would the world be worse off?”

If you can’t answer that, down tools until you can….

If you can clearly and succinctly answer that question; then you are an activist founder and are campaigning to change the world. Go for it with all your energy and passion. Stay true to your original purpose no matter what else changes.

For that’s what it takes to get a business to first place, and then, keep it there — lifted and sustained by your organisation’s urgent, relevant and powerful mission.

Notes:

Read more about Marc Andreessen’s VC shift in focus here.