My post on Friday speculating that Groupon could emerge as a multibillion dollar social enterprise was a hit on twitter and generated a number of responses. While much of the response was positive, one issue that bothered some people was my use of the term “social enterprise”.
Reader David Geilhufe:
“I think we need to be a bit more deliberate in applying the social enterprise label… But I do agree this could be the emergence of a multi-billion dollar corporate citizenship program AND virtually every corporate citizenship program would benefit from aspiring to be a social enterprise. But calling these things social enterprises takes away from the folks who build businesses from scratch for social impact.”
Reader Carrie Varoquiers:
“I do also wonder how we collectively define a social enterprise. By including Groupon it seems that we should also include Chevron as social enterprise since they provide us with the energy we need to turn on our lights and fuel our stove tops and power our cars in order to heat our homes and feed our children and get to our jobs every day. I would argue that Chevron has a much stronger purpose than Groupon, in terms of actual societal value. What about Genentech? Or Google? Are they social enterprises? If you are going to call Groupon a social enterprise, then my answer is definitely yes.”
The definition of social enterprise has been debated many times. While some people feel that only a nonprofit should be considered a social enterprise, I believe that the term has come to mean an organization that exists primarily to create social impact. The tax election that the organizations chooses should not matter, but their goals should.
Since I do not believe that Groupon’s primary goal is to create social impact, I probably shouldn’t have used the term social enterprise so loosely. But I do think that what Groupon is doing is fundamentally different than corporate philanthropy and the G-Team concept has the potential to bake social impact into the corporate DNA of Groupon.
In her post about G-Team, Christine Egger of Social Actions wrote:
“Groupon and The Point are two sides of the same coin, grounded in a shared theory of change: people’s resistance to doing something that benefits communities/businesses/themselves diminishes when they know in advance that they will be joined by others who want to do the same thing.”
Because Andrew Mason founded The Point first, then realized that the same concept could be used in a for-profit context and now is bringing The Point’s social impact focus to Groupon via the G-Team, I think it is fair to argue that social enterprise activity is taking place.
Look at it this way. The Point is clearly focused on social impact. If Groupon can serve as a dramatically more powerful platform for social impact via G-Team, the fact that G-Team is embedded within a for-profit doesn’t make it less worthy of praise.
It is for this reason that David’s statement that “Calling these things social enterprises takes away from the folks who build businesses from scratch for social impact” rings flat for me. I couldn’t care less if someone struggles with a good heart to try to achieve social impact. I care about the actually achievement of social impact. If it can be achieved at a higher level and wider scale within a for-profit company that mints money for its shareholders, I’m far happier with that outcome than if the concept stays within a definitionally pure “social enterprise” whose leaders “built it from scratch.”
Unlike a for-profit entrepreneur who might make a ton of money and then go searching for something good to do, Groupon is effectively the outcome of a social entrepreneur figuring out how to create social impact, then going looking for how to make money using the same concept and then returning to social impact.
The journey highlights the way that for-profit organizations have access to significant capital while nonprofits do not. The fact that Andrew could attract the capital needed to build the fastest growing business in history using the same “theory of change” that drove The Point, but could not attract that sort of capital while running The Point illustrates the disadvantage nonprofits have when it comes to growth capital.
It seems to me that building Groupon was probably the best way for Andrew to create social impact, because doing so gave him the capital he needed to grow The Point via G-Team.
I’ll leave the debate over the semantics of “social enterprise” to others. But Groupon’s G-Team is a project to follow and Andrew Mason is a social and for-profit entrepreneur to watch.