Post Growth Entrepreneurship notes
Week 1
LECTURE 1
Shortseller
- “Short position”
- Bets against the stock value of certain companies
- Bill Ackman
o Hedge fund manager
o Short position in Herbalife
o Said its not a company, but an MLM
§ Wanted its stock value to go down to 0
• He would make a lot of money if he ruined the company
- This is known as activist investing
- Publicly engage companies
- Used his money to dig up Claudine Gay, the same way he did with Herbalife
o Ran plagiarism tools on her writings
§ Found instances of plagiarism
o Tried to get donors to threaten the university
o Kept the pressure on until it worked
§ Claudine Gay was forced to step down
- Business and financial activism work
What is PGE
- Non-extractive business for idealists
- Fundamental questions
o Is growth good?
o What is financial extraction?
o Who is the startup ecosystem working for?
- Objectives
o Achieve system change vs. fighting symptoms
o Provide actionable alternatives for:
§ Entrepreneurs
§ Corporations, governments, NGOs
§ Financial industry
“The revolution starts in our heads” - Unknown
Alexander Medik
- Social impact entrepreneur
- Manager of the Dutch management ecosystem for development innovations
- Founder of disrupt development
o World’s first post growth change agency in global development
o Supporting organizations to think outside of the box
- Steward ownership
o Very old concept – over 200 years
o Companies live longer
1
, § Survival probability is 600% higher after 40 years, compared to
average companies
§ Better salaries
§ More trusted
§ More profitable in the medium and long run
- Challenges with being a steward-owned startup
o Going against traditional perspectives
o Working horizontally – no hierarchies
§ Cultures of trust and collaboration
§ International team, not everyone is comfortable with this system
- Mental health
o Being an entrepreneur is not easy
o Personal health should also come first, and that also resembles the health
of the organization
VIDEO 1
PGE
- Non-extractive entrepreneurship
- Financial extraction
o What is it?
o Why is it there?
o What difference does it make?
o How do we get rid of it
- Non-extractive business for idealists
o Fundamental questions
§ Is growth good?
§ What is financial extraction?
§ Who is the startup ecosystem working for?
• Is the program designed to help the founder? Or other
interests?
- Objectives
o Achieve system change vs fighting symptoms
§ Re-assembling pieces
o Provide actionable alternatives for:
§ Entrepreneurs
§ Corporations, governments, NGOs
§ Financial industry
- Steward ownership
o Separating voting rights from profit rights
o Golden share
§ Preventing your company from ever being sold
• Protecting the social mission
o Bootstrapping
§ Starting a business without external capital
- Making business personal
o We’re told business is a vehicle for building wealth for shareholders
o Business as activism
§ The most important form of activism
§ Need to get rid of the need for profit
2
, §How can we use capitalism to fight neoliberalism?
• Business as a tool to make change
o Business as art
o Business as spirituality
o Business as creative expression
Examining the status quo
- Financial extraction
o Unnecessarily removing wealth from businesses beyond middle-class
salaries and pensions that you would be using to pay your staff
§ Can take many different forms
• Dividends, exit, bonuses, CEO compensation
o Growth imperative: businesses have to grow
§ Why?
§ Financial extraction is at the root of the growth imperative
• Story 11th round parable – Lietaer, Eisenstein
o There’s a village, where villagers trade
o A stranger shows up and tells them to give him a
cowhide
o The stranger cuts round of the cowhide and gives
villagers 10 each
§ So instead of bartering, the villagers can
now exchange rounds
o The villager tells them he will come back and
demand an 11th round
o 3 Options:
§ Cut 1 round out of every 10 families
§ Default: Chase stranger away
§ Or: breed more chickens
o The stranger asks for the same thing the next year
§ But there are now too many chickens, and
its unsustainable
• Same situation as today
o The stranger introduced financial extraction into
their economy
§ Financial extraction = root of the problem
o “extraction is the original sin of business”
o Extraction is the original sin of business
o Multiple layers of financial extraction
§ Micro: personal debt
• Student loans, mortgage debt
§ Meso: corporate equity and debt financing
• What pulls value out of businesses
§ Macro: international development loans
Growth
- Tim Jackson = father of post-growth
- Macroeconomic growth
3
, o GDP: Growth domestic product
§ The measure of economic growth for countries
§ Why is this our measurement of national wealth?
o Can we achieve prosperity without growth?
§ How do we prosper in recessions?
§ The question that the post-growth economics movement is asking
Growth curves in business
- Kate Raworth
o TED talk: a healthy economy should be designed to thrive not grow
§ Tree metaphor
• There’s only one thing that grows exponentially forever =
cancer
o Can we move from exponential growth curves to flat ones?
Silicon Valley
- The Silicon Valley model
1. Capital
2. Scale
3. Exit
- Capital
o Seed financing, VC (venture capital) rounds, angel investment,
convertible loans, etc.
§ We’re told you need VC to start a business, but that’s a myth
• When you accept VC, you now have a boss
o Investors now have control
o VC is overhyped
§ By the startup ecosystem
• Linguistics
- Scale
o What exactly are we scaling?
§ Revenue? Profit? Employees?
§ The distinction makes a very large difference
o Is VC an accelerator?
§ What are we accelerating?
• Profitability? Customer acquisition?
o VC doesn’t scale profitability
• It depends
§ VC does not scale profitability most of the times
• Having capital does not make you more profitable, and it
does not make you more profitable faster
o 90% of startups fail
§ Product-market disconnect
§ Artificially bulking up as fast as possible is not a good way to
control your burn rate
• Runway phase
• Starting out without capital can be a blessing in disguise
- Exit
o Definition of success in traditional business
§ Startups as a series of lottery tickets
4
Week 1
LECTURE 1
Shortseller
- “Short position”
- Bets against the stock value of certain companies
- Bill Ackman
o Hedge fund manager
o Short position in Herbalife
o Said its not a company, but an MLM
§ Wanted its stock value to go down to 0
• He would make a lot of money if he ruined the company
- This is known as activist investing
- Publicly engage companies
- Used his money to dig up Claudine Gay, the same way he did with Herbalife
o Ran plagiarism tools on her writings
§ Found instances of plagiarism
o Tried to get donors to threaten the university
o Kept the pressure on until it worked
§ Claudine Gay was forced to step down
- Business and financial activism work
What is PGE
- Non-extractive business for idealists
- Fundamental questions
o Is growth good?
o What is financial extraction?
o Who is the startup ecosystem working for?
- Objectives
o Achieve system change vs. fighting symptoms
o Provide actionable alternatives for:
§ Entrepreneurs
§ Corporations, governments, NGOs
§ Financial industry
“The revolution starts in our heads” - Unknown
Alexander Medik
- Social impact entrepreneur
- Manager of the Dutch management ecosystem for development innovations
- Founder of disrupt development
o World’s first post growth change agency in global development
o Supporting organizations to think outside of the box
- Steward ownership
o Very old concept – over 200 years
o Companies live longer
1
, § Survival probability is 600% higher after 40 years, compared to
average companies
§ Better salaries
§ More trusted
§ More profitable in the medium and long run
- Challenges with being a steward-owned startup
o Going against traditional perspectives
o Working horizontally – no hierarchies
§ Cultures of trust and collaboration
§ International team, not everyone is comfortable with this system
- Mental health
o Being an entrepreneur is not easy
o Personal health should also come first, and that also resembles the health
of the organization
VIDEO 1
PGE
- Non-extractive entrepreneurship
- Financial extraction
o What is it?
o Why is it there?
o What difference does it make?
o How do we get rid of it
- Non-extractive business for idealists
o Fundamental questions
§ Is growth good?
§ What is financial extraction?
§ Who is the startup ecosystem working for?
• Is the program designed to help the founder? Or other
interests?
- Objectives
o Achieve system change vs fighting symptoms
§ Re-assembling pieces
o Provide actionable alternatives for:
§ Entrepreneurs
§ Corporations, governments, NGOs
§ Financial industry
- Steward ownership
o Separating voting rights from profit rights
o Golden share
§ Preventing your company from ever being sold
• Protecting the social mission
o Bootstrapping
§ Starting a business without external capital
- Making business personal
o We’re told business is a vehicle for building wealth for shareholders
o Business as activism
§ The most important form of activism
§ Need to get rid of the need for profit
2
, §How can we use capitalism to fight neoliberalism?
• Business as a tool to make change
o Business as art
o Business as spirituality
o Business as creative expression
Examining the status quo
- Financial extraction
o Unnecessarily removing wealth from businesses beyond middle-class
salaries and pensions that you would be using to pay your staff
§ Can take many different forms
• Dividends, exit, bonuses, CEO compensation
o Growth imperative: businesses have to grow
§ Why?
§ Financial extraction is at the root of the growth imperative
• Story 11th round parable – Lietaer, Eisenstein
o There’s a village, where villagers trade
o A stranger shows up and tells them to give him a
cowhide
o The stranger cuts round of the cowhide and gives
villagers 10 each
§ So instead of bartering, the villagers can
now exchange rounds
o The villager tells them he will come back and
demand an 11th round
o 3 Options:
§ Cut 1 round out of every 10 families
§ Default: Chase stranger away
§ Or: breed more chickens
o The stranger asks for the same thing the next year
§ But there are now too many chickens, and
its unsustainable
• Same situation as today
o The stranger introduced financial extraction into
their economy
§ Financial extraction = root of the problem
o “extraction is the original sin of business”
o Extraction is the original sin of business
o Multiple layers of financial extraction
§ Micro: personal debt
• Student loans, mortgage debt
§ Meso: corporate equity and debt financing
• What pulls value out of businesses
§ Macro: international development loans
Growth
- Tim Jackson = father of post-growth
- Macroeconomic growth
3
, o GDP: Growth domestic product
§ The measure of economic growth for countries
§ Why is this our measurement of national wealth?
o Can we achieve prosperity without growth?
§ How do we prosper in recessions?
§ The question that the post-growth economics movement is asking
Growth curves in business
- Kate Raworth
o TED talk: a healthy economy should be designed to thrive not grow
§ Tree metaphor
• There’s only one thing that grows exponentially forever =
cancer
o Can we move from exponential growth curves to flat ones?
Silicon Valley
- The Silicon Valley model
1. Capital
2. Scale
3. Exit
- Capital
o Seed financing, VC (venture capital) rounds, angel investment,
convertible loans, etc.
§ We’re told you need VC to start a business, but that’s a myth
• When you accept VC, you now have a boss
o Investors now have control
o VC is overhyped
§ By the startup ecosystem
• Linguistics
- Scale
o What exactly are we scaling?
§ Revenue? Profit? Employees?
§ The distinction makes a very large difference
o Is VC an accelerator?
§ What are we accelerating?
• Profitability? Customer acquisition?
o VC doesn’t scale profitability
• It depends
§ VC does not scale profitability most of the times
• Having capital does not make you more profitable, and it
does not make you more profitable faster
o 90% of startups fail
§ Product-market disconnect
§ Artificially bulking up as fast as possible is not a good way to
control your burn rate
• Runway phase
• Starting out without capital can be a blessing in disguise
- Exit
o Definition of success in traditional business
§ Startups as a series of lottery tickets
4
