You Can't Have Conscious Capitalism Without Capital

By Anne Sauer

When purpose, stakeholder orientation, leadership, and culture are the names of the game, money can sound like a dirty word. This turns out to be true even in a pro-business-by-definition setting like the Conscious Capitalism 2013 conference, which took place April 5th and 6th in San Francisco.

Palpable tension exists between conscious capitalists and the capital required to bring their higher purposes into being. The concept of trade-offs is simultaneously rejected and acknowledged, as when Patagonia CEO Casey Sheahan admitted to making decisions that might seem to hurt the business from a profitability standpoint, right on the heels of Conscious Capitalism co-author Raj Sisodia pointing out that conscious companies outperform the S&P 500 index by a factor of 10.5.

As John Mackey, co-founder and co-CEO of Whole Foods Market and co-author of the book Conscious Capitalism, astutely noted, “It’s counter-culture in conscious capitalism to consider the investor stakeholder.” But while a company that sees profit creation as its ultimate purpose will never be a conscious business, it is important not to throw the baby out with the bathwater. After all, it is in the interest of all stakeholders, not just shareholders, for a company to be financially successful. We just might need to adjust the way we measure that success."

Marry your investments

An investment may be a marriage of convenience that is going to end in divorce—but it is still a marriage! -Gary Hill, Chief Negotiation Officer for The Motley Fool

The comparison of investing with marriage came up multiple times over the course the weekend, with the heart of the metaphor resting on finding a partner with the right alignment who is willing to make a long-term commitment. For The Motley Fool’s co-founder and CEO, Tom Gardner, and Chief Negotiation Officer, Gary Hill, finding investors aligned with your values and vision for the company is crucial to the success of those relationships. It’s important not to forget that “at the center of the funding maze is a person,” said Hill. Added Gardner, “It’s funny how companies will often raise too much money with a misaligned investor rather than going for a smaller amount and better alignment.”

Stayful.com founder, Cheryl Rosner, described turning down an enthusiastic investor after she imagined the business being around for her “children’s children’s children” and realizing that she wouldn’t want to sit around the table with that person and their money for that length of time. John Danhakl of private equity firm, Leonard Green & Partners, says that too often in private equity, investing is treated like speed dating, and called for a mandate to invest for the long term.

An alternative to finding values-aligned VCs is to bootstrap your business or find other non-liquidity-based sources of funding. As The Felix Fun’s Bill Flagg put it, your company exists because you’re providing value to your customers, so why not see if there’s a way for them to fund it directly? (Crowdfunding comes to mind.) Maybe your suppliers would be willing to charge you on a sliding scale as your business scales. Bootstrapping may be a harder way to get started, but companies funded this way grow organically and are built for life.

Conscience is not enough

As a cash-strapped, indebted graduate student, it was difficult for me not to come away from the conference feeling wistful about my ability—or lack thereof—to participate in this movement. I’m not in a position right now to bootstrap a social venture or join a startup venture without being paid. I appreciate the point Tom Gardner was trying to make about the value of non-financial rewards when he asked the fascinating question, “If you were offered one job that paid $50,000 and another that paid $100,000, what would make you take the $50,000 offer?” while at the same time appreciating that someone with a family or other financial obligations might not have the luxury of answering that question optimistically.

I would have liked to hear more stories about what it means to create a culture of abundance, love, and trust, when cash is limited and employees are worried about making ends meet. What advice do these speakers have for someone like me, who is coming to conscious capitalism right out of the gate rather than later in my career, without residual income and a decade of experience to support my dreams?

At the end of the day, economic success it what allows conscious businesses to fulfill their purposes and create value for their stakeholders. You can’t have conscious capitalism without capital, after all. Money may not be sufficient, but neither is it the enemy of purpose.

Videos of talks from the first day of the conference, including a conversation on The Bottom Line with Tom Gardner, John Mackey, Casey Sheahan, Eric Ryan, and Cheryl Rosner, are available on the Conscious Capitalism 2013 website.

[Image credit: lucasstanley, Flickr]

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Anne Sauer is pursuing her MBA in Sustainable Management at Presidio Graduate School. Follow her on Twitter @aynsavoy