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Why Profits Are Not Enough: Mitch Kapor Asks Startups to Strive for Impact

Posted by Joe Garza on 2014-05-07

Sure, “traction”, ARPU, and profits are important for a startup to succeed, but do too many startups overlook the potential for generating a positive social impact, as well? Mitch Kapor, the Founder of the Lotus Development Corporation and designer of Lotus 1-2-3, certainly thinks so.

A pioneer in personal computing and information technology for the last three decades, Mitch Kapor’s software, Lotus 1-2-3, popularized the personal computer in the business world in the 1980s. Today, he is a Partner at Kapor Capital, which invests in seed stage tech startups that create a positive social impact, as well as a Co-Chair at the Kapor Center for Social Impact, an organization dedicated to promoting social impact for communities that are on the fringe of access to opportunity, participation, and influence in the United States. Mitch will also be a Keynote Speaker at the upcoming Founder Showcase, taking place on May 15th in Silicon Valley.  

Mitch’s current philanthropic endeavors are in response to the numerous problems plaguing today’s startup industry. One of these problems is a conspicuous lack of diversity in Silicon Valley, as well as throughout the entrepreneurial world.

According to Kapor:

Our nation's failure to achieve equal educational opportunity has exacerbated race-based economic disparities and produced two starkly different American economies” 

A narrow view of capitalism excludes a large number of entrepreneurs, namely those from minority groups. However, it is these groups that are best equipped to close societal gaps - gaps in academic achievement, gaps in economic opportunities, gaps in access to information, etc.

But how exactly can these inimical conditions be overcome, and whose responsibility is it to make such drastic changes?

The leaders of the innovation economy can and should play their part in reviving capitalism by making it more responsive to a changing country's full range of widespread needs, and more inclusive in the process.”

However, since monetization is often a primary goal for launching a potentially prosperous company, investors and entrepreneurs should naturally be hesitant when embarking on a venture with humanitarian aspirations, right?

Not according to Kapor.

Business success needs to be measured not just by profit, but by social impact as well. In a world where that was the norm, absolute returns on stocks might be slightly lower, but absolutely everyone would be better off.”

Through Kapor Capital and the Kapor Center for Social Impact, Mitch aims to help entrepreneurs fulfill their altruistic ambitions and close societal gaps. By offering feedback on business plans and social strategies, Mitch hopes to foster more businesses that empower minorities and low-income households with modern technological tools.

Some notable companies that have received funding from Mitch’s organizations include Zoobean, a web platform that curates literacy resources for children; Catchafire, a skills-based volunteer marketplace; and Pigeonly, a photo-sharing and low-cost phone call service that helps incarcerated individuals connect with their loved ones and maintain their ties to society.

Our firm, Kapor Capital, invests in these companies and dozens of others that work to close gaps. We saw that startups like Pigeonly were launched by entrepreneurs who identified an unmet need in the market as a result of their life experiences... Investing in the people who are too often locked out, and their ideas, can advance our economy and our country to the next level.”

While technology advances at an exponential rate, human institutions do not. Because of this disparity, Mitch Kapor emphasizes the need to transform the current state of capitalism into one that is more inclusive of and responsive to America's changing demographics.

What do you think of Mitch's approach to investing?

Leave us your comments below, or join the discussion at Founder Showcase on May 15th, where Mitch will be a Keynote Speaker.  

 

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