In their early stages, startups need a sustainable influx of income to secure top talent and potentially attract millennials – consumers with $41 trillion in transferred wealth. All of which can be achieved by having a simple component at the core of their business strategies: Purpose – why you exist and the value you create for society.
While many startups pursue maximising revenue first, smart ones start with a clear idea of why they exist. For startups, it is often overlooked as a component that can be added further down the road, rather than an essential from the get-go. But done correctly, purpose has the power to galvanise your workforce, inspire consumers and most importantly, benefit others. Brand purpose is a north star for business, an unwavering guide in navigating operations and informing business decisions.
Traditionally, profit maximisation was seen as the sole reason for businesses’ existence and success was assessed based on profit. In 1970, economist Milton Friedman stated, “There is only one social responsibility of business – to use its resources and engage in activities to increase its profits”. Fast forward forty-six years and more and more businesses are doing well by ‘doing good’ for people and causes beyond themselves.
It’s become evident that businesses are better off when they work towards a purpose, which creates social value beyond the bottom line. Big names such as Unilever, Starbucks, and Virgin have proven mission-led businesses can thrive while marrying profit and purpose rather than treating them as separate entities.
For startups, building and maintaining brand purpose can pave the way for brands to differentiate themselves and become disruptors within their respective industries. Startups built with a commitment to purpose at their core include Kickstarter, Ella’s Kitchen, Warby Parker and Toms Shoes, to name just a few.
Toms Shoes founder, Blake Mycoskie, had no experience in retail or any contacts in the footwear industry when he started out in 2006. He capitalised on the purpose behind his product and quickly learned that the story could sell the shoes for him. He had a natural marketing hook that galvanised customers. Mycoskie sold a 50% stake in his company in 2014, then valued at $625million; the same year the brand expanded into coffee. The profit from the sale established TOMS Social Entrepreneurship Fund, which is encouraging the next generation of entrepreneurs to use business to improve lives, globally.
Warby Parker started as a competition entry for four students competing for support from the Wharton Business Plan Competition. Based on Toms Shoes’ well-known one-for-one model, Warby’s “Buy a Pair, Give a Pair”, the eyewear e-retailer first hoped to provide a solution for the lack of eye-care resources in developing countries. Their plan: “to challenge the status quo” of the luxury eyewear industry. Their purpose: provide affordable eyewear because everyone has the right to see. Their promise: for every pair of glasses sold, a pair is given to someone in need. Warby is currently worth $1.2 billion and reached its annual sales goal within just three weeks of launching in 2010.
Companies such as LinkedIn and Twitter all confirm the necessity of both purpose to their success. Both flaunt their purpose as having a democratic ethos, to serve everyone rather than a select few; “by creating economic opportunities for every member of the global workforce” and “giving a voice to the voiceless” are rallying cries that signify more brands becoming social movements, uniting people with shared values.
Profit and purpose are inextricably linked in successful and sustainable businesses. As Astro Teller of Google says “Purpose is the point. Profit is the result.”