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Why Guided Consumption can Work 2022-07-28T12:18:05.758Z
EA startup - non-profit sustainable marketplace 2022-03-24T13:35:51.802Z

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Comment by Vincent van der Holst (BOAS) on Please pitch ideas to potential EA CTOs · 2022-09-04T19:16:28.198Z · EA · GW

BOAS (boas.co) is the world's first marketplace that donates all profits to save lives and we need a CTO to help us scale and get funding (we're pre-seed).We launched in January 2022 and we’ve grown to more than 1.500 products (almost 100% MoM) and growing our active users at around 50% MoM and we spent no money on advertising.You can the role and detailed tasks in our jobs page. You can apply there or send me a DM with any questions! Even if this is not you, please share the message with someone who might be a great CTO. Thanks in advance!

Comment by Vincent van der Holst (BOAS) on 30 second action you could take · 2022-08-06T08:51:28.123Z · EA · GW

There is actually research that suggests that people who have names early in the alphabet do a bit better in life. So although I'm sure you're joking, it is a good idea. 

Comment by Vincent van der Holst (BOAS) on GLO, a UBI-generating stablecoin that donates all yields to GiveDirectly · 2022-07-28T17:48:28.500Z · EA · GW

That does help a lot to know that the risk has been very low but does exist. Open source for security sounds like a good idea, but I'm non-technical so I might be wrong. At least the transparency of that is something that I value a lot. 

I'd still be interested to know if you would only invest in US bonds. With China likely eclipsing the US in our lifetime, and these things not always going down without a literal fight, that might make US bonds more risky than the market currently thinks, meriting a more diverse bond backing. 

Comment by Vincent van der Holst (BOAS) on Why Guided Consumption can Work · 2022-07-28T17:39:12.567Z · EA · GW

Brad has touched on the other subjects and I mostly agree with those so I won't touch them. 

About why we're doing BOAS: at first we thought this was almost completely new, and we wanted to show the world that this is a good idea, that it can work, can scale, and is a high EV opportunity. I'm now reasonably convinced that this is a good idea, because we know it works, scales and is high EV (because these companies would be better investments for philanthropists versus their competitors if  they gave to EA charities). 

Convincing existing GC's to give according to EA principles seems like EA's job to me, together with CPI. EA is trying to globalize their principles and if they are successful there are no more GC's to persuade. Unfortunately, I don't think EA is good at marketing itself to become truly big, and with my background marketing that might be an area that I someday want to take a stab at, but I'm focusing my work on proving EA aligned GC for now (which I think has much higher EV because almost no-one is working on that versus many movement builders). 

I think we haven't seen this taking off apart from Denmark because of a lack of awareness and choice. You can't choose to buy your car from a GC or in the case of BOAS, you can't buy anything sustainable from a GC. So it's critical to create the awareness and we know from Amazon smile that this could work (high growth with relatively little marketing and awareness), and it's also critical to build choices. I'm focusing on building that choice and then move on to create awareness. 

Writing a bestselling book about this idea, convincing 1000 people to start GC's, resulting in 100 successful businesses and 10 GC unicorns might be higher value, but then again, I'm a terrible writer.

Convincing 10 billionaires this is a great idea also seems like high EV, and I think that's something we're already trying to do with BOAS in the form of showing it can be done and we can multiply their money. But again, I view this more as the job of EA as a whole.

Another high EV would be to establish a GC VC fund that can fund 100 of these businesses and see a couple turn into unicorns, and then we hope more and more will follow. 

I have many ideas, but I'm focusing on execution right now. 

Comment by Vincent van der Holst (BOAS) on Why Guided Consumption can Work · 2022-07-28T12:33:26.418Z · EA · GW

I agree with that. We mentioned in this post that the research might have a risk of sampling bias, but if others also think we weigh this evidence too heavily, we will address that in the text. 

I would like to note that Guided Consumption is not only focused on consumer goods, but we think that's a good segment to test this in, but we believe other segments are very much possible too (any company can be a Guided Company, although it will make more sense in some areas more than others). 

I believe a focus on longtermism is a good strategy in any company (also consumer goods), and with lower short-term pressures in the absence of ROI investors, Guiding Companies are uniquely suited to use that to their advantage. 

Comment by Vincent van der Holst (BOAS) on GLO, a UBI-generating stablecoin that donates all yields to GiveDirectly · 2022-07-25T15:24:42.511Z · EA · GW

I think this is an incredible idea and would love for it to win. My biggest concern with this pivot is the odds of the loans defaulting and philanthropy and people potentially losing billions of dollars. But if USD bonds default, it's likely that the US is going through a very bad time, and the USD (instead of GLO) that was otherwise held would potentially do very poorly too. Is there any sort of research on the odds of these bonds collapsing, and how does that relate to the yield? 

A smaller concern is that crypto has had major hacks that stole millions to billions (I unfortunately was part of one of those hacks), and I would like the GLO team to think and assess the risk of that happening to them. 

And if the "In theory GLO sounds great but it’s absurdly ambitious and unlikely to succeed" is a negative feedback point, I strongly disagree with that. With your two million seed donation and the potential being 2900 billion a year in UBI, any odds that are above 0% are worth that initial investment. At EAG London it was emphasized many times we should be pursuing bigger ambitions, yet I continue to hear from people with the most ambitious ideas that they are told to be realistic. You can always make the idea smaller, but it's hard to make an unambitious idea ambitious. If you get this feedback it means you're on the right track! 

Comment by Vincent van der Holst (BOAS) on GLO, a UBI-generating stablecoin that donates all yields to GiveDirectly · 2022-07-25T15:11:33.218Z · EA · GW

FTX and Binance have credit cards that could let you hold GLO and convert it in USD at the moment you buy something (like a car). If GLO get's listed on those platforms you should be able to pay with GLO instantly using a mastercard or similar from those platforms. 

Comment by Vincent van der Holst (BOAS) on Making Trillions for Effective Charities through the Consumer Economy · 2022-07-11T14:42:19.643Z · EA · GW

Although that would be great, from all of the research I read about donations, it doesn't seem that effectiveness is a big factor for consumers. I do think a certification for effectiveness could help, but based on the data I'm pessimistic how much it would add compared to marketing your charity effectively. 

Comment by Vincent van der Holst (BOAS) on Making Trillions for Effective Charities through the Consumer Economy · 2022-07-11T14:30:42.294Z · EA · GW

Please note that my latest comment includes the research paper with additional data. Looking forward to receiving more feedback. 

Comment by Vincent van der Holst (BOAS) on Making Trillions for Effective Charities through the Consumer Economy · 2022-07-11T14:28:40.804Z · EA · GW

A lot of the critique that we get is that we can't be sure this works because we haven't done enough research or can provide data to show that this works. That's great critique and this post addresses both.

Research

We commissioned research (a Master's Thesis that was just successfully defended) on the economic sustainability of philanthropic enterprises (i.e. guiding companies) that donate all profits. Please note the research was completely independent but we did pay the researcher for their time. 
 

Here is the main conclusion of the paper (I encourage people to read the abstract and discussion and conclusion if they want to understand more): 


"The thematic analysis demonstrates that philanthropic enterprises should be able to meet the economic needs of their current and future stakeholders without compromising the objective to donate all of their profits to non-profit organisations and charitable causes. However, the research findings do not suggest that their corporate philanthropy alone is enough to drive economic sustainability. Instead, philanthropic enterprises should preserve some flexibility in the yearly donation percentage and reinvest a part of their profits to market their philanthropic endeavours and develop their business."

For those who want to dig deeper into all of the data and citations, you can find the thesis here

Data

I want to emphasize that there is already a lot of data in the paper, but this is additional data that we have. 

  • We ran the exact ad from a competitor (one of our most successful competitors) and swapped one headline of three headlines from "100% sustainable baby products" to "100% of profits go to charity".  We changed the sustainable message in the description (one of two) to a donation message also. The non-profit ad was clicked on 50% more than our competitor's ad  (5.99% interaction rate vs 9.24% interaction rate).
  • We ran a qualitative analysis asking people how they would rate a company that donates 10% of profits to charities and how they would rate a company that donates all profits. 10% of profits was rated 7.1 and all profits was rated 8.7. Please note that donating 10% of profits is already exceptional. 
  • The reply rate to our cold emails to sustainable brands is more than 20%. This is, by far, the best cold email I've ever sent. The average reply rate of cold emails is 1-5%. The conversion from reply to signed brands is almost 50%, meaning that for every 10 cold emails we sign up 1 sustainable brand (10% conversion rate). Most cold email campaigns are well under 1%. 
  • Brands sign up with higher commission percentages. Multiple brands have told us explicitly that we ask for a higher commission than the competition (they are usually on more than one marketplace) but that they accept that because we donate all profits. 
  • To conclude: it's easier for us to sign up brands, and we sign them for higher percentages than our competitors. 

Please note that we will do purchase intent research tomorrow (what is currently our most risky business assumption) to see if consumers go for the donation option significantly more than a regular offering and we will test this with identical products and with a product people have a small disliking for, to see if people sometimes go for the lesser option if the proceeds go to charity. We will share here once we have the results of that research. 

Consolidating feedback

Brand and I have talked to a lot of people over the last couple of months about this concept and we get a lot of the same feedback, so we will start consolidating everything into one sheet together with us addressing the feedback. We will share that once it's done. 

Of course, more research and data is needed, but what we have found so far is very encouraging for the prospects of guiding companies. 

Comment by Vincent van der Holst (BOAS) on Making Trillions for Effective Charities through the Consumer Economy · 2022-07-06T16:41:11.859Z · EA · GW

Yeah we can definitely do that. We have a research paper coming out on Monday with loads of references and data and the research is independent (but sponsored by BOAS). Will post it here once it comes out. 

You can already look at our pitch for investors/philanthropists which has some data points from ads and talking to more than 100 user and 50 brands. We always encourage feedback so feel free to reply.  

Comment by Vincent van der Holst (BOAS) on Making Trillions for Effective Charities through the Consumer Economy · 2022-07-06T10:47:31.208Z · EA · GW

FYI Negative advertising against competition can be powerful but you have to tread lightly (at least in the EU) for legal issues. I have talked to laywers about this and you can be sued if you say the wrong things and even factual negative advertising (e.g. we're X% cheaper than our competitor Y) has strict rules for what you can and cannot say. 

Comment by Vincent van der Holst (BOAS) on Making Trillions for Effective Charities through the Consumer Economy · 2022-07-05T10:40:28.955Z · EA · GW

My background is in marketing and this is one of my major concerns as well. People don't behave and buy rationally, and don't accept perfectly rational actions from companies who are "good". We're not sure how people will react to a billion dollar guided company who has a CEO who earns 10 million or that pays workers an unfair wage. But I do believe that if that company is open about why they operate the way they do, and they market the impact from their giving, this will still be an advantage. The company might pay its CEO 10 million, but it donated 1 billion this year to effective charities and that saved 100.000 lives. If you focus on the incredible impact that company has I think the overall value of marketing your charitable giving is positive, even if it is small. We know from Newman's Own that 6 figure pay and increasing prices with inflation are accepted by the general public, so I don't actually think those are issues. FYI I am from Europe. 

The good thing is that even if this makes a small difference to consumers (we agree on that) there's no reason this won't work with effective marketing and infrastructure to fund these companies, although that's far from easy. If a guided company has even a 0.1% advantage to their competition this advantage will compound and the company is "winning" slightly more and the extra profit would be worth the investment from philanthropists. Brad explains this really clearly:

"So, if we define the value of a firm with a normal shareholder set as F(k), I would posit that the relationship between the value of F(c), a firm owned 100% by a popular charity, is that F(c) > F(k). It seems to me that F(c) = F(k) + P, where P is the monetary value of the advantages attaching to the popularity of charities with economic participants  vis a vis the popularity of normal investors with market participants."

Even if P is low, and we argue it might, this company would still outperform the competition. As was discussed before, P is not only from marketing, but also from tax benefits, discounts, free advice/consultancy and improved employee recruitment and retention. My guided company has seen free marketing, advice, consultancy as well as tax benefits and discounts, and our job openings have far more engagement than any I have ever posted for other companies. We have also run a marketing campaign using the ad of our competition and a new ad that focused on us giving away all of our profits and that was clicked on 50% more. We also have traction with brands currently because we donate our profits to charities instead of shareholders, so we're signing more brands and we're taking higher commission because we're an ethical company. We literally have brands tell us "your commission is too high, but we'll pay it anyway because it's going to charity and we love what you're doing". These results on the most important sides of our business; consumers and brands, is encouraging that the value of P is definitely more than zero and perhaps a lot higher. We do have to gain much more information from our marketing efforts to understand how this translates to purchase intent. 

Lastly, I want to say that our researcher just finished his master thesis on the economic feasibility of this business model, and we spoke to all stakeholders (investors, consumers, guided companies, traditional companies and brands). It's still in draft but I will release it here once it's ready to be shared (hopefully within a week). This thesis will have a lot more data and references than this paper so it might address some of the empirical concerns that people have voiced. 

Comment by Vincent van der Holst (BOAS) on Making Trillions for Effective Charities through the Consumer Economy · 2022-07-04T08:35:15.912Z · EA · GW

I really enjoyed reading your dialogue and wanted to jump in with some more thoughts. 

If you look at companies ranked by market cap (an easy way to estimate the overall profitability potential of companies). You'll find commodities/monopolies (oil, Google) and more differentiated companies (apple), so it seems that for overall profit potential both avenues could work. 

"What leads you to conclude that investing in guiding companies is a better alternative to these existing investments?"

I agree that the main factor is what Brad has already mentioned: it's a structural advantage and it cannot be replicated by competitors who are for-profit (investors love companies that have something that can't be replicated!). In addition, I think that funding guiding companies are a more direct and impactful path to impact. If you invest in guiding companies, you're investing in a company that donates directly, and you can influence the path of that company to more impact (rather than profit) and the founders and employees might be persuaded to become EA's and sign the founders pledge. Additionally, showing that guiding companies can work might slowly start to shift the broader economy to guided consumption, and with the economy having trillions and trillions of dollars in profit each year this could make more than just a dent in some very important problems. 

"Agreed on your points here. Which metrics do you think are useful to decide which industries guiding companies make sense for? "

In addition to your metrics I would look at the competitiveness of markets. It's very hard to enter monopolized markets such as search engines. Is it a market where we can build a competitive offering? 

If we believe that it will be continue to be hard to get funding for guiding companies, it might make sense to start with businesses that are easy and cheap to start, thus requiring less capital. Dropshipping is a good example. 

I believe that price is a more important factor for consumers than donating profits to charities, so I would start with a business that can offer similar prices to the competition. I run an online marketplace that has the same prices as competition. That also makes it easier to test the extent to which people value guided consumption. We actually ran 2 ads on Google where one was the add of the competition, and the other was the same ad including the profit destination. The profit destination ad was clicked on 50% more often, a very encouraging stat. 

Another category of products would be one where people don't care much about the price (or buy even more if the prices are higher): luxury. Thomas, Brad and I were brainstorming if we could not create the world's most expensive products and sell those to the rich (e.g. a 10 million USD T-Shirt where all profits go to charities). Just a thought. 

"In real life, I've heard a lot of entrepreneurs talk about how 'mixed value propositions' actually lead to fewer customers deciding to buy a product than a single, clear value proposition. How have you thought so far about ensuring that product marketing leads to one deciding factor separating a guiding company from competitors, not unclear value propositions that repel customers."

Great point, and one that I've seen in my work as a marketeer a lot. We run a sustainable marketplace that donates all profits to charities, so we have 2 important USP's: we're sustainable and we donate all profits. We have already found that people care more about the second USP (encouraging) and we're now thinking if we need to only focus on the non-profit part. It's something that we need to test though, but that's very simple. Profit destination should murk the offering. 

"Curious to hear your thoughts on getting around the initial high investments / low returns :-)"

I think we would tackle this exactly how the for-profit sector has done it: VC's who are okay waiting 2-10 year for an ROI. I don't think this will be an issue, because many HNWI already work with these time horizons for their for-profit investements, billionaires grant money across their lifetime in smaller tranches and EA is already being patient with their funding. 

Brad: "I am inclined to think that few, or even one, charitable profit destination would be appealing to consumers."

I think the opposite. The most important factors considering where people donate are proximity (favoring local donations) and how close it is to their heart (e.g. I lost a nephew to cancer so I donate to children's cancer charities). I think choice is really important for consumers and based proximity that will be many charities. That's a problem because local and close to heart charities are usually not that effective, so if we want to provide choice and try to give as much as possible to EA charities, we might want to try and nudge people to the best options. 

Comment by Vincent van der Holst (BOAS) on Making Trillions for Effective Charities through the Consumer Economy · 2022-07-04T07:40:32.825Z · EA · GW

Hi Jo,

We agree that profit has contributed to many of the problems that we face. We also agree that profit for non-profits is one factor among many, but I disagree that this is always a small factor. I believe it's a small factor in some businesses (e.g. the restaurant example, where you're going to go with the best marketed, top-reviewed and most tasty option) and a bigger factor in other business (e.g. buying from an insurance broker, where two dozen brokers are all selling an identical product and one donated all profits to charities). 

But let's assume it is a really small factor and suppose two identical companies (an online marketplace), where one is purely for-profit, and the other donates profit to charities, start. These companies need one billion in funding to generate 10 billion in future profits. The for-profit company gets the billion from VC because the expected value is 10 times the investment. In the current state of the world, the company directing profits to charities doesn't get the one billion because there is no VC like EA infrastructure to fund it. But if such a structure existed (e.g. SBF donating/investing the billion), the company directing profits to charities would be able to take off and donate 10 billion to charities over its lifetime. Again, both of these companies are identical, and let's assume they have a 1000 differentiating factors, only one of them being the profit destination. With all things being equal, the company who has 1001 differentiating factors would win. You're right that the reality is much more complex, and you're right in saying: "It is not safe to assume that because a business purchases, manufactures, and distributes the same or similar goods, their up-front cost is the same and therefore the cost to the consumer is virtually the same." But these are factors that are relevant to both for-profit companies and guiding companies. Statistically, if you start the above company a 1000 times you would have 1000 different outcomes, but even with an additional differentiating factor (assuming it's positive), the odds of the guiding company to win are higher, even if that's just a very small percentage. And that should warrant investment in them.  

In reality I think companies have less differentiating factors and a company that donates all profits to charities has more than 1 extra. A couple are named in the article and a recent blog on this forum also hinted to another advantage which is going to be really important for success, employee recruitment/retention. I have found this to be true for my own EA startup, which directs all profits to charities. 

So the crucial part that seems to be missing at this moment, is an infrastructure to fund guiding companies. If I start a for-profit, I can go to investors, and if they like the team, the numbers and the idea they will invest in it. This doesn't exist for guiding companies, but if it did, I don't see why guiding companies couldn't do at least as well as for-profit companies (if people don't at all care about the profits going to charities) or better (if people do care). 

You raise a very interesting point about for-profit companies being dependent on coercion, exploitation, etc. I think that's true for many of the biggest companies, but not true for smaller companies and I don't agree that it's always necessary to be successful, but it is in most cases. I genuinely think that some of the biggest companies in the world can be ones that are mostly good (e.g. Patagonia or FTX). I say mostly, because any billion dollar company will make mistakes. I don't think businesses whose sole purpose it is to do good always have to use coercion or exploitation, but I agree that they sometimes have to. Personally, I don't start businesses who rely on these methods, but I do think creating companies that have to use coercion to compete and that donate their money to charities are still a (much) better option than we have now. Government has to work together with guiding companies to create a playing field where these methods can't be used anymore, but we can't wait for that to happen. 

Comment by Vincent van der Holst (BOAS) on Making Trillions for Effective Charities through the Consumer Economy · 2022-07-01T13:26:34.963Z · EA · GW

FTX does sometimes advertise their foundation but they are not a GC of course. I hold my crypto on FTX because I know it will end up in their foundation or on SBF's bank account and he'll do great things with it. I think more people would switch to FTX if they went GC or advertised their charitable work more broadly. 

It's great that people like SBF are humble, but his purpose is worth bragging about and it might accelerate the causes he cares about. 

Comment by Vincent van der Holst (BOAS) on Making Trillions for Effective Charities through the Consumer Economy · 2022-07-01T13:18:28.724Z · EA · GW

Traditional companies are also scrutinized for their strategies, investments and donations by their shareholders, which I believe to be a good thing because it improves business and holds people and companies accountable. 

Personally I wouldn't start a guiding company that isn't ethical (e.g. bad for the environment, known for underpaying, prohibiting unions, sweatshops, etc.) because I believe the profit has to be made in a good way, but that's my personal view. Rationally, it would be better for oil companies to be guiding companies, where the profits would offset some of the harm they cause. 

I believe that guiding companies need a similar investment infrastructure as traditional companies and I agree that more than one philanthropist would invest. These guiding VC's would invest in the guiding companies who have the best shot at generating a large return on donation (ROD). In principle it's exactly the same as traditional VC, who also invest in whatever they believe to have the highest ROI. 

Comment by Vincent van der Holst (BOAS) on Making Trillions for Effective Charities through the Consumer Economy · 2022-07-01T13:10:19.521Z · EA · GW

I completely agree that it makes no rational sense for people to choose traditional companies over guided companies with all things being equal. But I've been in marketing long enough to know that people are highly irrational and emotional, and charities evoke a whole host of strong emotions. It will be really interesting to see how the public responds to guiding companies, but I know it won't be rational. The CEO of Newman's Own apparently made 270K USD each year, this question on quora about the CEO's pay is also interesting. Most people tend to think that 270K USD isn't too much. 

With new talent (millennials) caring much more about the sustainability and ethicality of their jobs, guiding companies might have better teams, and better teams, provided there is enough money, built the best companies. I'm very excited about this aspect and from anecdotal evidence from my company, this is true. We have a lot of applications on our jobs and the main reason they apply is because of our guiding company business model. 

Comment by Vincent van der Holst (BOAS) on Making Trillions for Effective Charities through the Consumer Economy · 2022-07-01T12:56:17.905Z · EA · GW

It's obviously better to not buy stuff you don't need, but when you do need something, buying it from guided companies would be a better option than traditional companies, simply because they create impact from their donations. If you buy a 100USD worth of stuff online and 5USD goes to effective climate charities, in most cases you would be offsetting more CO2 than what was generated in the supply chain of those products. 

I think the key word in Aswasse's message is "necessary". I agree it's probably not too healthy if people buy even more because they no longer feel guilty buying stuff they don't need. 

Comment by Vincent van der Holst (BOAS) on Making Trillions for Effective Charities through the Consumer Economy · 2022-06-30T16:22:35.014Z · EA · GW

Thanks for raising these points Seth. I agree that the burden of proof is higher than what we currently have. This paper and the companies that some of us are building are just the start of proving that this might someday happen. 

I think it's critical to note that guiding companies are basically for-profits. There's nothing distinguishing them  from for-profits except that the profits go to charities and that the investors are philanthropists buying out companies or funding new guiding company initiatives. 

The good news is that there's one large successful case with Newman's Own, who have donated about 570 million USD to charities and give away all of their profits. There's more smaller projects that are successful and donated millions, but nothing that I know of that's close to Newman's . I see one big difference between Newman's Own and the other initiatives that are less successful: money.

I hired a research intern to validate that and he's now drafting up his thesis on the economic sustainability of this business model (I can share it here once it's done), and the main conclusion is that the issue with this is money. If you have someone like Paul Newman funding your guiding company there's no reason it can't be big, and that turns out to be true, because Newman's Own is a multi-billion dollar company in a very competitive space. If the wealthiest philanthropists put their weight behind this and "invest" in the next best guiding companies, I don't see why these companies cannot be the biggest in the world. With the money you can hire the best team, and the best teams build the biggest companies. Currently, the infrastructure (venture capital, stock markets, etc.) are lacking for guiding companies, but these can be built. This will take a long time. 

To answer your other questions, I have no evidence that any Fortune 500 company tried this, but I don't think that kind of initiative would be public. You could argue that Warren Buffet, who intends to give away almost all of his wealth, is buying and investing into companies to generate more profits that he can give away to charities. But that's indirect. Why hasn't he bought a company and turned it into a guiding company? Twitter and EM are an interesting example as well. Maybe EM would use Twitter to fund his next EA endeavor (e.g. backing up humanity to another galaxy). Would Twitter be a guiding company in that case? 

Comment by Vincent van der Holst (BOAS) on Making Trillions for Effective Charities through the Consumer Economy · 2022-06-30T16:18:37.649Z · EA · GW

Thanks for raising these points Seth. I agree that the burden of proof is higher than what we currently have. This paper and the companies that some of us are building are just the start of proving that this might someday happen. The good news is that there's one large successful case with Newman's Own, who have donated about 570 million USD to charities and give away all of their profits. There's more smaller projects that are successful and donated millions, but nothing that I know of that's close to Newman's . I see one big difference between Newman's Own and the other initiatives that are less successful: money.

I hired a research intern to validate that and he's now drafting up his thesis on the economic sustainability of this business model (I can share it here once it's done), and the main conclusion is that the issue with this is money. If you have someone like Paul Newman funding your guiding company there's no reason it can't be big, and that turns out to be true, because Newman's Own is a multi-billion dollar company in a very competitive space. If the wealthiest philanthropists put their weight behind this and "invest" in the next best guiding companies, I don't see why these companies cannot be the biggest in the world. With the money you can hire the best team, and the best teams build the biggest companies. Currently, the infrastructure (venture capital, stock markets, etc.) are lacking for guiding companies, but these can be built. This will take a long time. 

To answer your other questions, I have no evidence that any Fortune 500 company tried this, but I don't think that kind of initiative would be public. You could argue that Warren Buffet, who intends to give away almost all of his wealth, is buying and investing into companies to generate more profits that he can give away to charities. But that's indirect. Why hasn't he bought a company and turned it into a guiding company? Twitter and EM are an interesting example as well. Maybe EM would use Twitter to fund his next EA endeavor (e.g. backing up humanity to another galaxy). Would Twitter be a guiding company in that case? 

Comment by Vincent van der Holst (BOAS) on Making Trillions for Effective Charities through the Consumer Economy · 2022-06-30T13:54:48.955Z · EA · GW

Humanitix is a great example, turning something super annoying into good! I will try and reach out to the founders to learn from their lessons. 

And don't get me started on GIC, what a concept! I have subscribed to your newsletter and will follow it closely. Great to see more people interested in this model. I might reach out to you as well to learn from what you've learned!

Comment by Vincent van der Holst (BOAS) on Making Trillions for Effective Charities through the Consumer Economy · 2022-06-30T13:41:51.697Z · EA · GW

Please note that I helped edit this piece and gave my feedback, and that I have left my red team points in the previous longer paper. Also note that I'm building a Guiding Company, so I'm biased.

"But even if Guiding Companies engage in activities that consumers take issue with regarding traditional firms, such as competitive (i.e., princely) compensation for CEOs, it is not clear why this would cause a consumer to choose a company that enriches shareholder over a company that helps fight global poverty."

I think consumers would actually oppose high CEO pay and other activities they deem immoral from Guiding Companies. There's many examples from NGO's that got berated for activities that would be normal for traditional companies, like high CEO pay, and I'm not convinced it would be different for guiding companies.

Furthermore, we agree that consumers would  choose a company that donates profits to charities over a traditional company when all things are equal, but I suspect that situation is hard to create and will take a long time. Consumers, investors and philanthropists are still wary of this idea, so (for now) it's harder to attract the capital needed to acquire or build guiding companies that can compete with investor backed companies. And if you get to the no-brainer level, you still need to be able to market it to the public effectively. There seems to me to be no obvious reason why this wouldn't work, but creating this movement, persuading stakeholders and building these companies will require a lot of time, money and talent and should not be underestimated. But the size of the opportunity is potentially all the profits in the world, so it's definitely worth exploring. 

Comment by Vincent van der Holst (BOAS) on Are too many young, highly-engaged longtermist EAs doing movement-building? · 2022-06-23T16:01:35.534Z · EA · GW

I agree with Vilhelm that the counterfactual is very important. Are there community builders who would otherwise have more impact in things like high risk entrepreneurship or AI research? Community building is important, but it might not have the high upside potential that research or entrepreneurship has (unless you recruit the next best researcher or entrepreneur through community building). 

Another concern that I sometimes think about is the degree of funding going to community building. I might be wrong but a lot of funding seems to be going to community building projects, which is good, but I do see some other projects not receiving funding. That's counterfactual again: are there projects that aren't being funded because those funds go to community building? Or are those projects not being funded because the grant makers think they are bad ideas?   

Comment by Vincent van der Holst (BOAS) on Misercordia Launch!!! · 2022-06-20T09:20:28.616Z · EA · GW

Love this concept based on Brad West's paper. Maybe it's an idea for CEA to do their shirts for events with Misercordia? You could ask them. (Perhaps the most important advice I would give to a young social entrepreneur is to ask, ask, ask). 

Comment by Vincent van der Holst (BOAS) on Misercordia Launch!!! · 2022-06-20T09:15:13.213Z · EA · GW

You might want to look into setting up a EU version of the website that's linked to a EU based print on demand supplier. This will save shipping costs and delivery times substantially, 2 factors that are very important for consumers. 

Comment by Vincent van der Holst (BOAS) on Misercordia Launch!!! · 2022-06-20T09:13:32.323Z · EA · GW

It's very normal to pay up to 2% for a transaction (even at scale), so I wouldn't worry about that. We're paying 1.8% on average on our Shopify and at massive scale that number will still be around 1%. 

Looking forward to our talk today!

Comment by Vincent van der Holst (BOAS) on Guided Consumption: Funding Charities by Leveraging Consumer Sentiment in the Broader Economy · 2022-06-15T13:10:15.755Z · EA · GW

I might be suited to reply to this because we've been trying to be a guiding producer (boas.co) for almost a year. I don't have a lot of time to reply so this is rather quick and dirty but it's a result of more than a 1000 hours of work. I've also studied economics so I can answer your call for an economist about the economic feasibility but am not going in depth in it now. We even have a research intern who is researching the economic feasibility of our project/guiding producers (research is probably ready in 3 weeks and I'll share). I'll try to reply to everything and feel free to DM or email me (vin@boas.co) if anyone wants to discuss further or in person. 

The red team and positive points below are either my personal experience, from data we have or they are the experiences or opinions (those that I heard a lot) from others I talked to. I have probably talked to hundreds of people about this subject and this is what I hear and experience the most. Our company is in the process of validating whether this paper has merit and most results so far are positive, but there's a lot more validation to be done (most importantly how guided consumption translates to purchase intent). 

Some, if not most, of these points are addressed at least in part in this paper. I'm merely emphasizing or adding to some based on my experience. I'm talking to Brad West tomorrow and wanted to put my unbiased points here before that conversation. 

Red Team Points

  1. Maybe the best founders want to start companies that make them rich, not donate to charities. 
  2. Maybe the best "investors" want to make themselves rich, not donate their part of the profits to charities.
  3. The most successful companies usually don't turn a profit for many years, and require millions to billions in funding. How do guiding companies secure that funding if bullet 1 and 2 are true (successful companies usually have the best founders and investors)?
  4. It's hard to match the features of the most successful companies if you don't have bullet 1,2 and 3. Profit destination might only be a deciding factor for purchase decisions if your company at least matches the competition and enables guided consumption as a differentiating factor/USP.
  5. Profits that are donated to charities can't be reinvested for marketing and R&D. You might reinvest all profits for a long time and donate nothing, but will customers "allow" that or do they demand charitable contributions from the start?
  6. People might object to market or above market rates for employees. There have been many cases where reputations of non-profits have been harmed because executives made 200K USD per year, which is far less than they would make in for-profit organisations. This might also be true for guided producers. 
  7. Companies need financial buffers for unforeseen circumstances and crises. We have talked to companies that nearly bankrupted themselves because of their giving. 
  8. Guiding companies might have an uphill battle because they can't secure the best founders and investors. The entire investor infrastructure around guiding companies still has to be built.
  9. The paper assumes people might (start to) care about profit destination, which might not be true. That will make it harder to start guided companies because of the bullets above.
  10. There is a lot of distrust in the world so the authenticating systems you mention are important. Guiding companies should have far more transparency than conventional companies.
  11. If companies donate "some" of their profit and that's a low percentage of their profit they shouldn't be allowed to call themselves guiding companies imo as it might be seen as green washing/ethics washing and hurt the overall furthering of guided consumption.
  12. Were incorporated in the Netherlands and some structures exist (e.g. steward ownership) but we can't be a charity (even though we are like a non-profit) and if we donate more than a couple hundred K we actually need to pay tax on our donations. There is work to be done for guiding companies in terms of tax benefits and the organization structures that currently exist.
  13. How do you balance maximizing profit for designated charities and making that profit in a moral and ethical way. Is it ok to make your money in ways that might harm people and the planet if you give the profits away? How and where do you draw the line? Do you pay your warehouse workers minimum wage (not enough to normally live of off in the US for example) so you can donate more to charities? Do you squeeze suppliers for more profits so you can donate where it's needed more? The morals and ethics of this need to be developed and there are many opinions.
  14. In my experience people care far more about ineffective charities than effective ones.
  15. So far, EA /Philanthropists and Investors have been skeptical of this idea. Exacerbated by the fact that their returns are probably lower when investing in this kind of thing.
  16. I would be interested in further brainstorming why this idea hasn't taken off so far. It genuinely surprises me how little karma and interaction this post/idea is getting, even if it's laid out so clearly in this paper. Are we severely overestimating how much people care? If even EA's don't seem to care so much, does the regular consumer? 

Positive things, in my experience, about guided consumption

  1. Some of the best people want to work for guided companies because they donate profits. Some of these people are wealthy and only want to work for companies that improve the world and guiding companies are uniquely suited to do so.
  2. Some of the biggest "investors" are philanthropic, if you can convince them of your idea, they could find millions or even billions to take it to the moon.
  3. Being a guiding company can be a competitive advantage in hiring, at least for non-founders. Some of the best people only want to work for "positive" companies. Companies are a product of their people so this might be a huge factor in why guiding companies might win.
  4. Guiding companies get discounts on marketing, software, recruitment, consultancy etc. because they serve the world, not shareholders. This lowers all sorts of costs and could even help guiding companies offer lower prices and secure another competitive advantage.
  5. Guiding companies might pay lower tax amounts. This could help guiding companies offer lower prices and secure another competitive advantage.
  6. Guiding companies might start talking about the producer surplus of their competitors, creating awareness among the general public that it's better to buy from guiding companies if they exist.
  7. We compete in the sustainable marketplace sector because it has many competitors and they don't have clear differentiation, our giving is used as a differentiating factor already and early results indicate that it's indeed a reason companies partner with us, but we're not sure about purchase intent on the consumer side, yet. 
  8. "Newmans Own" has been discussed in the comments already but I want to mention it too. You make it sound like they weren't terribly successful, but they donated 500 million USD so far and there's no reason they won't go to more than a billion. This is the strongest case in guided consumption we've seen so far and I believe our researcher has talked to them so we'll have some insights from them soon. We have more case studies from companies who are successful in guided consumption (indicating that they are succesful because  they give their profits away), but it's just a few so they might still be outliers.
  9. NCOO's are only necessary when guiding consumption is still the exception. When it becomes the rule it might no longer be necessary. This is likely to take decades if it ever happens at all.
  10. Guiding companies might benefit from a independent label (similar to B Corp for example) that distinguishes them from normal business and identifies them as true guiding companies. 
  11. Our default giving option is to let us decide, which means we donate to the most effective charities (e.g. Maximum impact fund). Consumers can also choose cause areas they like (climate, poverty, animal rights) which are also effective. If they want even more granularity, they can opt for an individual charity. This structure ensures most of the giving is effective (and easy for the consumer) while still enabling choice for the consumer.
  12. We haven't found that being a guiding producer is costly. The most important thing we did is to just open up our books and having books is a requirement every company has anyways. The cost of opening our books has been close to zero. Creating automated and open infrastructure might be costly but can be shared among the guiding producers and could even be white labeled for additional revenue. 
  13. The largest for-profit companies, almost without exception, face expensive litigation because of anti trust and illegal and unethical behavior. These have large direct and indirect (reputational) costs that are likely to be lower for guiding producers.
  14. We believe crypto could be an interesting avenue for raising funds and establishing a community
Comment by Vincent van der Holst (BOAS) on Guided Consumption: Funding Charities by Leveraging Consumer Sentiment in the Broader Economy · 2022-06-15T12:51:40.221Z · EA · GW

The key is indeed getting to a situation where you're matching the offering (prices, product, delivery speed, UX/UI) of the competition and that might take a very long time and cost large sums of money, so that's easier said than done. Only then does it become a no-brainer for the general public. 

I agree that Paul Newman made the mistake to not publicly voice how much good they were doing. That's humble and noble, but if they were more vocal about it they might have been even more successful. Do note that they donated more than 500 million USD so they were by no means small. 

Comment by Vincent van der Holst (BOAS) on Guided Consumption: Funding Charities by Leveraging Consumer Sentiment in the Broader Economy · 2022-06-15T12:48:27.157Z · EA · GW

Amazon is in many ways a dropshipper with a strong brand an high loyalty(although they've gotten big also because of their warehousing). I do completely agree that people mostly care about price reviews and delivery speed. That needs to be matched, and then people might consider guided consumption. The good thing is that I believe guided producers can match the competition and then have that unique selling point of giving profits away. 

Our researchers spoke to Newman's Own and I'm soon speaking to TOMS as well, and brands like these are looking at sales channels that align with their mission, and guided producers might be uniquely suited to serve their needs. 

Comment by Vincent van der Holst (BOAS) on Guided Consumption: Funding Charities by Leveraging Consumer Sentiment in the Broader Economy · 2022-06-15T12:44:09.804Z · EA · GW

Luxury goods might be a good avenue, but in the long run we're hoping that many businesses are replaced by guiding producers, and the companies generating most profits mostly aren't luxury companies (perhaps with the exception of Apple). I think both can be successful in guided consumption.  

I had/have the idea to sell extremely high priced items that were unique. My idea was to create the world's most expensive t-shirt (was thinking like 1 or 10 million USD) with a popular artist and donate 99% of that to charity. Seemed like that kind of thing would generate a lot of PR with the right artist and buyer.  I still think this might be worth pursuing, but if you want to move the broader public towards guided consumption I believe there's more to be gained in commodotized businesses that sell goods/services to millions. That's why we ended up trying to be a guided producer as a sustainable marketplace. I think I have an almost delusional faith that guided consumption (I call it profit for non-profit usually) will work and I've quit my job, bootstrapped a business and sunk quite a lot of my net worth and all of my time into pursuing it. I have a lot of skin in the game and certainly not going to give up any time soon. 

The books you mention are ones that I've got recommended a lot and I'm trying to read them in the upcoming months, thanks for elaborating on some important concepts in the books!

Comment by Vincent van der Holst (BOAS) on Some unfun lessons I learned as a junior grantmaker · 2022-06-15T12:32:42.010Z · EA · GW

I think it's worth mentioning the recent paper that Brad West wrote on this subject. It explains very well why we exist and what we're trying to do, much better than my quick and dirty writeup. Happy to hear any feedback on that! 

Comment by Vincent van der Holst (BOAS) on Guided Consumption: Funding Charities by Leveraging Consumer Sentiment in the Broader Economy · 2022-06-10T15:28:01.219Z · EA · GW

Thanks for mentioning us Markus! I'll need some time to properly read and digest this, but will reply in full after!

Comment by Vincent van der Holst (BOAS) on Some unfun lessons I learned as a junior grantmaker · 2022-06-07T09:51:58.011Z · EA · GW

Hi Charles,

Thanks for responding and I'm sure people like you, at least I do for being ruthless, that honestly helps a lot so thank you!

I should start by clarifying that the EA forum post is not the proposal that we put many hours in, that was probably written in about 30 minutes and checked by one EA, and it's not meant to be a full pitch but just an intro to what we do. We did get feedback on that (and I got a lot more later at EAG, even from some of the grantmakers that rejected us) but when I refer to getting no feedback I mean the rejections from grants with no feedback. 

About your remix/take on the EA forum, I agree that EA shouldn't fund average startups and/or for-profits (I don't consider our venture a for-profit though). I can't be an unbiased judge on whether we're average or below/above average, but I can send you the pitch deck and answer any questions/concerns you might have and then you can be the judge. You also mention previous experience, advisor reviews, hypotheses and unfair advantages, and those are all in the pitch. I'm now thinking it might have been a mistake to do a quick write up for feedback and thoughts, maybe a thorough one would have been better because I think I can address most of the concerns that you and others have but wanted to avoid a 10 page post outlining all of the questions and criticisms and how we're addressing them. 

Can I send you the deck and relay your questions in a quick call? I learn the most from the harshest critics and you seem to be one. 

Comment by Vincent van der Holst (BOAS) on Some unfun lessons I learned as a junior grantmaker · 2022-06-06T15:20:42.453Z · EA · GW

Not giving feedback on proposals is sometimes seen as insulting as well. We got rejected about 4 times by EA grants without feedback and we probably spent 50 hours writing and honing the proposals. Getting a "No" is harder to swallow than "No, because...". I wasn't insulted because I get all of the reasons for no feedback, but it doesn't leave you feeling happy about all the work that went into it. 

I also agree with various comments here that the ROI of very short feedback is likely very high, and I don't think it's a big time burden to phrase it in a non-insulting way. I'm going to reapply again in the upcoming months and it's likely we get rejected again. If I knew the reason why I might not reapply or reapply better, both of which would save the grant maker considerable time (perhaps X more than writing one minute feedback).  

Comment by Vincent van der Holst (BOAS) on How should people spend money to be more productive? · 2022-04-20T16:09:35.401Z · EA · GW

Meditation is the thing that keeps me sane and without my sanity I'm not productive. The value of my meditation app (headspace) is immense for me. 

And as mentioned before: big/second monitor

Comment by Vincent van der Holst (BOAS) on Snowball Fund - A Low-Cost, Low-Risk, and High-Upside Experiment · 2022-04-11T09:46:57.691Z · EA · GW

I think this is a fantastic idea because it partly solves a real problem I have, which is mentioned in the article: "Anecdotally, many entrepreneurs bounce off the EA community, which has been described as overly risk-averse, too academic and theoretical, and ‘biased against action’'. 

That has been my impression since becoming more active as a EA entrepreneur. The amount of help from EA's is fantastic, but there seems to be a gap to help early stage EA entrepreneurs move forward with funding. This is anecdotal, but it seems if you can't show a low-risk, high EV opportunity your odds of funding are low. I have a business that's high-risk/high EV (although some disagree) that VC seems to like but EA just recommends me to earn to give. What if the VC's are right and the EA's are wrong? 

I share most concerns, mostly that it might become low-tier. You're mentioning that other VC's do a lot of DD and you want to avoid that (e.g. 30 minute call for EA alignment and intro), but isn't the DD a large part of why VC's are succesfull? Another part of the success is the value added in addition to the money. EA has been extremely helpful for me, and that would be a large factor in my decision to work with the snowball fund. EA could leverage it's intelligence and network of investors (many of whom are philanthropists and ROI investors) to achieve above average returns. 

I believe in the snowball effect this might have through word of mouth and founders pledge. I talk to other entrepreneurs about how they can give more (effectively) and if we have more EA aligned founders that might create a viral effect where it will be increasingly normal for entrepreneurs to be EA's. The success of this fund might be a catalyst for FP and future Bankmans' and Moskovitch's. 

Comment by Vincent van der Holst (BOAS) on EA startup - non-profit sustainable marketplace · 2022-04-05T10:28:51.238Z · EA · GW

Hi Mathias,

Sorry for missing this (have turned email notifications on my post on now).

I agree that the EA community is not suited to evaluate the idea. VC's are, but they seek an ROI so they might like the idea so won't fund it. Based on the talks we had so far I'm pretty sure this idea would receive seed funding if it could provide ROI. 

Over generalizing here, but the EA community or wealthy EA's can fund it, but not evaluate it. VC's can evaluate it, but can't fund it. Is it a thought to see if we can combine the two somehow? EA works with investors that can evaluate profit for non-profit ideas and if they think they have potential EA can fund it?

I have researched counterfactual (spoke to 80K and Charity Entrepeneurship) and I do not believe it's much higher (or higher at all) for me. The odds of success of this endeavor are low, but the potential profits we can donate to effective charities are huge. 

P.S. great that you like the blog post and sharing will help us!

Comment by Vincent van der Holst (BOAS) on Yonatan Cale's Shortform · 2022-03-23T17:30:35.180Z · EA · GW

I'm the person Yonatan is referring to. His feedback and your general feedback are very helpful, so thank you for that! I have been a lurker within EA for years and will write more content on the EA forum, including requesting feedback on the idea (soon). Hopefully that will help, although I don't know because I didn't get feedback. 
 

Before I move into why I think grant makers should provide short feedback I want to be clear:  I'm completely comfortable with being rejected and I completely understand that grant makers are very busy. 
 

Having said that, I think grant makers should feedback the applications they reject. It doesn't have to be more than 1-2 lines and one minute to write. I have applied to EA 6 months ago and got rejected and applied again last month and got rejected again. I had a lot of encouraging talks with EA's (although criticism as well)  and was more convinced this was going to get funding. I have no idea if they hated the idea and they think it will never work, or if they think it doesn't fit them, they are not able to evaluate properly, etc. The potential impact of knowing why is very large. It might help me improve the idea, maximize the impact or pursue other paths that are more impactful and effective. I think that one minute feedback has a high expected value. Knowing why will also help me decide whether to reapply or not, either saving the grant makers future time if I don't or improving the idea so it has more impact if I do. Feedback might help EA get less reapplications of higher quality, increasing overall impact and reducing the time to review. Win-win?

Comment by Vincent van der Holst (BOAS) on Peter S. Park's Shortform · 2022-03-23T17:09:20.529Z · EA · GW

I did my bachelor thesis on a company that was acquired by elsevier for 100million USD. Elsevier (now called Relx) has a market cap of 60 billion USD. Getting a majority voting position would require dozens of billions probably. Counterfactual impact from allocating a couple dozen billion is much larger. So I think it's not feasible nor recommendable.