|This is a Draft Amnesty Day draft. That means it’s not polished, it’s probably not up to my standards, the ideas are not thought out, and I haven’t checked everything. I was explicitly encouraged to post something unfinished!|
|Commenting and feedback guidelines: I’m going with the default — please be nice. But constructive feedback is appreciated; please let me know what you think is wrong. I probably have a lot more thoughts I haven’t written down so feel free to ask me questions in the comments.|
In 2019 I tried building a startup to promote effective giving in workplaces. It didn’t work out as a for-profit but looks somewhat promising as a non-profit and has facilitated £630k in donations (around £160k of this went to Founders Pledge recommended charities). In this post, I share the story and my lessons learned.
Since writing this draft, I’m excited that a new CEO with vastly more product experience than me has taken on Tyve as a nonprofit.
HT to Sebastien who I met at EAG 2020 and suggested I write up a post-mortem and to Lizka for encouraging me to post as Draft Amnesty Day 2 years later.
- Fall in love with the problem, not the solution
- I’d prefer to do similar projects as nonprofits in the future
- Probably don’t try to solve a lack of effective giving with technology
- Fundraising at workplaces can work decently well but I’m not sure EA/tech helps
- Don’t confuse “this should exist” with “people want this to exist”
- Ignore all the above advice
I started Tyve (like Tithe with a funky spelling) after working at Founders Pledge in September 2019.
The idea was to encourage employees to give a % of their income to charities and we’d encourage them to give effectively.
My startup pitch was as follows:
- millennial employees care about purpose and employers need to find better ways of delivering this
- one way they could do this would be by supporting people in giving to causes they care about
- there’s a nifty system in the UK called payroll giving where the employer can play a helpful role in enabling employees to donate pre-tax to charity through their payroll
- payroll giving appeared to be a potentially untapped market. Only 2% of people in the UK give through payroll and apparently this is 30% in the US
- the existing players all had terrible UX and we were going to fix it and create a modern experience (like challenger banks had done to high street banks)
- we were also going to use the cost-effective estimates of our recommended charities to quantify the good they were doing, making it more satisfying
I now feel pretty iffy about most of the assumptions and the argument - I’d like to think this is based on what I learnt but I also think I could have realised at the time that some of this argument is pretty weak.
- I was relatively sceptical about donation apps but I thought I might have found a problem (small startups have employees who want to feel like they’re at a “good” company but doing CSR at small startups is an effort). I thought a cheap alternative would be to provide a spruced-up version of payroll giving.
- I built an MVP with my cofounder Ben O (a great software developer who I met at EAG Oxford 2016 with the explicit intention to find cofounders - kudos to that conference).
- I got 5 companies whose founders I knew well signed up and paying for the beta. We were pretty excited as people were giving unusual high amounts (thanks to anchoring people on % and targeting fairly well-paid startup employees) and about 50% was going to charities we’d recommended (either based on GiveWell or Founders Pledge).
- I quit my job and then raised £150k SEIS from well-known angel investors in the UK.
- It was a buzz raising this money from people who are considered the best in the biz. I wangled a beautiful plant-filled office in London and were able to pay Ben O, myself and Sam (our designer) a basic salary.
- For the first few months, we made the product work properly and signed up 10 more companies (mainly from my existing network).
- Then we had to find more customers and go further outside my network.
- This was pretty brutal as we discovered what we’d built was very much a “nice to have” for these companies. At one point we spent 14 days straight copying and pasting LinkedIn messages every hour of the working day to CEOs and HR people of every UK startup under 500 employees.
- When this didn’t work, we looked to pivot and find other problems HR people had that we could somehow solve with something impactful. We had a couple of ideas but nothing where we felt we had a “right to win” and thought it made sense to dedicate ourselves to. (I think the most plausible contenders were helping startups recruit talent from lower-income countries and helping employees have more fulfilling careers.)
- We eventually returned the remaining funds to investors, transitioned the company to a nonprofit and continue to run the company on a volunteer basis.
- It currently has £15,000 amount going through each month from 150 users. About 25% goes to recommended charities.
- It’s not clear how much of this is counterfactual - I had the sense that a good number of people just chose our top climate charity which was exciting but I also noticed a few people choosing EA EA-adjacent charities (e.g. GiveDirectly) who we hadn’t recommended so they must have heard about the charities separately and may have already had direct debits set up.
What was promising?
- Asking people to donate works
- Suggesting charities works
- Anchoring people on percentages seemed to work however people wanted to give fixed donations
- Getting recurring donations
What didn’t work?
- The cost of recruiting users was pretty high because we had to sell to both the employer and then the employee to sign up.
- Couldn’t get enough workplaces to say yes (might have been better if we weren’t charging)
Lesson 1: Fall in love with the problem, not the solution
This is a standard startup lesson we learnt the hard way. The problem we personally cared about was how to get more money to EA charities but the business problem we were solving was how to help HR teams attract and retain talent. When we found out that HR people didn’t think workplace giving was a good way to do this we were stuck. We could either try and solve the HR problem another way but not be motivated by our work or we could go hunting for another problem that Payroll giving could help with but this is ill-advised.
Another way I’ve heard this lesson described is: make sure your impact is in “lockstep” with your profit.
Example 1 - Not in lockstep
Tyve - Payroll giving company.
Make money by: helping HR people hire mission-driven talent
Have impact by: getting employees to give to effective charities
Example 2 - In lockstep
Hire.ly (just made this up) - Recruitment firm for software developers in low-income countries.
Make money by: getting people in low-income countries high-paying jobs
Have impact by: getting people in low-income countries high-paying jobs
Lesson 2: I’d prefer to do similar projects as nonprofits in the future
There are some tempting advantages to setting up as a for-profit:
- It can be easier to raise money, especially from counterfactual sources (the money wouldn’t otherwise be spent on good things) and in later rounds, it can be easier to get very large amounts of money, even if your business is still unproven.
- It can be easier to hire the best talent because you can reward them with upside/Equity.
- It can feel more exciting and perhaps more legible to outsiders (perhaps starting a for-profit sounds more impressive than starting a nonprofit).
As described above, our personal goal was to move as much money as possible to the most effective charities. Our commercial goal was to make money for businesses. If we had set up as a nonprofit and raised money from EA funders with the goal of getting a multiplier on donations, then we could have focused relentlessly on the best way to achieve this goal. When we failed to solve someone from HRs business problem we could have offered the product free and just instead focused on fundraising as much as possible. Alternati,vely we could have pivoted towards, for example, some kind of donation app. However, we couldn’t do this because it wasn’t a way to make money.
Lesson 3 - Probably don’t try to solve lack of effective giving with technology
I have often made and heard the following pitch:
- Why don’t people give to effective charities?
- People all want to do good
- They also want to do more good with the same donations
- We just need to make it easier for them to give
- And we’ll gamify it so that they all donate…
- And then we’ll show them the impact of their donations which will motivate them to give more
I think this is mistaken. The reason people don’t give to charity is not due to ease. If I want to give to charity, I can go to AMFs website and get this done in minutes.
Nudges and gamification can make a difference on the margin but it’s not a core product. If it is, then you’ve just made a game with a charity extra.
I think if the problem you’re trying to solve is “I feel guilty about being rich” - there’s a good, cheap way to solve this for most people: don’t think about it.
Lesson 4 - Fundraising at workplaces can work decently well but I’m not sure EA/tech helps
I think One for the world / High Impact Professionals have shown this. I think they raised more through a couple of fundraisers than we did through all the people using Tyve over a year.
Lesson 5 - Don’t confuse “this should exist” with “people want this to exist”
I think it can be tempting to see a way you want the world to be different: “How great would it be if everyone started being more thoughtful about their donations and gave more systematically and effectively? They’d probably be more satisfied too, we just need to get them to do it…”
This isn’t a good basis for a startup idea unless it leads you to find a problem your users actually have.
Lesson 6 - Ignore all the above, maybe you can be the one to do it right
- There’s now a successful-looking version of this called Deed
- Looks like Deed just crossed 2.9M in ARR on another 10M in funding
- Maybe it’s possible and I didn’t execute well, the timing was bad or maybe this would work much better in the US.
- I’m relatively optimistic about someone doing this as a nonprofit but I suspect there could be better fundraising projects to do with your time.
Thanks for sharing this, I really enjoy retrospectives of failure, and think they are very useful. Also, I think you could remove the 'draft' warning label; this seems like a totally respectable finished post to me.
Thank you Larks!
This is a really good post and you're making me feel bad about my own Draft Amnesty Day posts :P
[take this as a compliment :) ]
I specifically resonate with your entire Lesson 3 - Probably don’t try to solve lack of effective giving with technology , I didn't think about 'I think if the problem you’re trying to solve is “I feel guilty about being rich”', which is a nice insight pointing at "understand the users really well".
Here's my version of your Don’t confuse “this should exist” with “people want this to exist” (I really agree here too).
I love the humor as well as the correctness of Ignore all the above, maybe you can be the one to do it right: Someone is going to crack this, yeah (maybe Momentum will). The main takeaway for this kind of project isn't [in my opinion] that it's impossible, it's more like "it's harder than it seems / don't ignore this hard part".
Anyway, that's my draft comment. Nice post!
Thanks Yonatan. I like your version of "should exist vs people want this to exist". I've also seen and been tempted by proposals for "lists".
Thanks for sharing this, I really enjoyed it.
I did some "customer" research around effective giving a year or so back and found some similar themes.
Engaged EAs already seem to have what they need. Most other people give small amounts to affirm/signal their values, with little regard for impact. It is indeed easy to think of things that "should exist" but people don't want!
Thanks Craig - I'm glad to hear it. Like I said in the piece, I'm sure there are some opportunities and angles here but I think that's a decent summary.
Thank you for being transparent and insightful about the lessons learned. I found this post useful!
Would you be comfortable sharing some more statistics? I'm thinking things like...
You've nudged me one step closer to writing a similar thing about learnings from a Swedish charity startup I worked with in 2017-2020.
It would take me some time to get good numbers for these. Here are some thoughts off the top of my head in the meantime.
1. Rate of enrollment at companies.
I think this averaged 25%. We had a couple of enthusiastic companies of around 50 people where we got 35-40% . But it wasn't uncommon to have more like 6%.
2. Average donation amount.
The £15,000 number includes company matches. The average monthly donation is £75 and the average company contribution is £25. Some companies offer very generous matching e.g. topping up donations by £50 regardless of donation size. Also bear in mind a small number of people are donating 10x more than the average.
I don't think it was lower when we were operating as a for-profit.
3. Dropoff rates
Dropoff rates are very low (less than 5% a year if you exclude people who leave the company). This is one of the biggest advantages of payroll giving.
Would be great to hear your account of the Swedish charity startup.
Thank you for sharing your experience. I think your observation that there are not really big barriers to individuals effectively donating is correct.
If you'd like to check out my approach to funding charities, it would enable individuals to fund charities without personal sacrifice, by buying from companies with charities in the vast majority equity position. That way they could pay the same amount for goods and services, but charities benefit rather than traditional shareholders.
The back end of this project, which I call the Profit for Good model, is potentially pretty powerful: people can fund charities without personal sacrifice through economic discrimination. The front end is a much heavier lift however. Not only do you have to have companies with charities in the equity position, you also have to have a public that is aware of the option and has the means of exercising it easily available. Nonetheless, I think this model has a good chance of solving many major global problems because anyone would rather buy in a way that helps people if there are not associated sacrifices.
If you would like to learn more : https://forum.effectivealtruism.org/posts/WMiGwDoqEyswaE6hN/making-trillions-for-effective-charities-through-the
Thanks for posting, this is super interesting! Learning #1 is also my top learning from starting a company.
It sounds like Tyve didn't have proper product / market fit and hence you struggled gaining more customers if I read it correctly? Looking at Deed, their posterchild efforts seem to be climate change and LGBTQ rights, which many startups/employees already care about greatly, so I can see executives viewing the product as a good way to showcase their company's committal to DEI etc. Did you go more with a bednets and effective giving pitch? Ofc I'm just speculating here.
Glad to hear Jan.
That's right re: PMF. We were very open about what causes people could support but I think you could be right that leaning into e.g. climate change could have helped. My sense was that companies in the UK preferred other ways to contribute to these causes because:
1. Donating money feels less direct than interventions like recycling, not using plastic, vegetarian catering
2. HR didn't want to be seen to ask people to give their money away (this felt awkward for some)
3. There are activities which are more visible, feel-good and cheaper to signal support (e.g. charity fundraisers).
What does EA/tech mean? EA-related tech?
Sorry I meant it as two separate things.
1. I'm not sure tech will help you fundraise more at work.
I spoke to one traditional payroll-giving fundraiser and he raised more for charity in a day than I did in several months. His method was to go round each table in an office, pitch them for 5 mins on the tax benefits of signing up and ask them to sign up on a piece of paper to give to a charity close to their hearts.
2. I'm not sure EA will help you fundraise more at work.
As in the above example, people are happy to give to charity regardless of the EA pitch. I think the EA pitch can help inspire some people and the fact that a chunk of people chose our recommended charities is encouraging but I don't think it's a gamechanger in the volume of donations.