The Generational Enterprise

A couple of months ago I wrote about the Generational Founder, the Founder archetype best positioned to build businesses that address today’s stubborn societal problems. This Founder possesses deep empathy for the problem, and has superior commercial and “political” capability. Today, I will discuss components that this Founder’s business must be proficient at.

The philosophy

There are trillions of dollars in the hands of different stakeholders seeking solutions to the same big societal problems, but we have a coordination problem. Sean Davis’s book, Solving the Giving pledge Bottleneck is a great primer on this topic. This problem can be anecdotally explained by a foundation seeking to advance causes in sustainability through grants, but relying on investment returns from fossil fuels. Private enterprise’s creativity and incentive structure position it for a leadership role in coordinating venture design, stakeholder management, and mutual, sustainable value creation. Companies that can navigate this terrain become generational enterprises.

The Generational Enterprise

The Generational Enterprise’s primary focus is to deliver sustainable, superior customer value with consistency, which then drives return for for its shareholders. This organization must be proficient in the capabilities below to deliver superior ROI.

Economic design

Technology – Means leveraging rapid technological development to reimagine or invent economic models that address large, underserved markets and open new markets for capital seeking market return. For example, blockchain technologies allow for building rails for quick and cheap clearing and movement of capital across borders. AI on the other hand is dramatically reducing input costs unlocking higher gross margins.
Knowledge – Means harnessing entrepreneurship knowledge that is now broadly accessible. This allows for solving problems quicker (many people are attempting) and cheaper (reduced cost of mistakes). I particularly like Rob Liu’s Anthena University. Rob is on a mission to help a million Founders start their first business. Knowledge also makes it easy to identify challenging areas where capital can be deployed with the highest ROI.
Global access to resources – This used to apply mostly to natural resources, but with remote work this means access to the best human capital. The Generational Enterprise can find best people anywhere, facilitate efficient coordination, and use this positioning to target global markets early.

Stakeholder design

Capitalization tables – Means the ability to coordinate shareholders with different objectives on a single capital table. This requires innovative thinking e.g., flexible rules for providing liquidity or thoughtful design for performance-based social KPIs.  
Non-dilutive capital – Public institutions and private foundations increasingly rely on commercial enterprise for program delivery. For companies, this means mastering the bidding process e.g., grant writing. It also means ability to navigate opportunity cost of constraining mandates e.g., hiring quotas. Organizations like Joel’s  Climate Finance Solutions stand out in their ability to help companies navigate this landscape.
Table setting – Early in my career I underestimated the value of non-market stakeholders in building scalable ventures. I believed that if social outcomes were embedded in a company’s business model, all stakeholders would eventually fall into line. Like me, most Founders are not trained in this skillset. James Mason, and Gene Flood at Flood Mason Holdings are excellent at table setting and they helped me to deeply understand that every big endeavor must be collaborative.

Design for sustainability

Customer value – Sustainable, superior customer value is the ultimate measure for success for the Generational Enterprise. This means focusing on solutions that boost access, improve quality, and are affordable in price and capital efficiency.
Unit economics, return – Compelling unit economics are the single most important indicator for product-market fit. Unit economics allow for generational companies to pay their employees and to continuously develop great products without the disruption of visiting capital markets repeatedly. Compelling unit economics establish a firm foundation for superior return.
Public good(s) – Changing social attitudes from consumers and regulators are forcing companies to embed stewardship of public goods into their business models. The purview of public goods is expanding and now includes morality and authenticity. It’s no longer sufficient to just pay your taxes and avoid polluting the ocean. Issues like social justice, free speech, matter so much more!

Generational Enterprise for generational problems

Startups get rewarded for solving problems, and those solving the most difficult problems receive the biggest reward. The biggest problem of our time are the elimination of the most critical progress gaps to deliver human development to billions who currently lack access. Businesses that will successfully solve these problems are complex and multidisciplinary. They can only be run by the Generational Founder.