In a recent post about entrepreneurship, there was emphasis on the earn-to-give capacity of entrepreneurship rather than the direct work. Even in the post, it implied a dichotomy between earning-to-give and direct impact. It states,
"With a 20% annual discount the numbers are not that far off from what I've heard as higher-end estimates of the value of direct work, and I expect that there is a fairly strong correlation between being at the higher end of entrepreneurship returns and being at the higher end of direct work, so this doesn't seem like that strong of an argument for entrepreneurship over direct work."
The author maybe didn't realize one could do both (or didn't have the information). I will argue that direct-impact for-profit startups are underappreciated for having a large impact. I am very familiar with y-combinator (the sample of startups used for the analysis in the post) as I was interested in startups and read the y-combinator advice even before learning about EA (YC is how I was re-reminded of EA and got me into it). Some of the startups do have missions that would align closely with EA problem areas. On the website, the list of startups (found here) there are tags at the bottom left.
Under the "medical devices" tab, which I am most interested in, I found a couple working on medical devices similar to EA goals. The company Ananya Health focuses on a lower cost a cryotherapy medical device for freezing off pre-cancerous lesions for cervical cancer. Current systems are much more expensive and lowering the cost will allow lower income countries to use it. In a map of all DALYs globally in 2019, cervical cancer occupies 0.35% of all global DALYs. Cervical cancer cost 8,955,012.78 DALYs in 2019 and led to the death of 280,479.04 people in 2019 (note: there is overlap)(source <- look under cervical cancer) . Since YC invests in startups that have the potential for a billion-dollar market cap, they believe that Ananya Health has the potential to grow into at least that and that the founder has the interest in that. It does sometimes happen that YC founders pivot into new areas, but Anu Parvatiyar (the founder) started it in May 2020 and was in the YC batch of Summer 2021 which makes it more likely that if there was initial qualms about the market size, it would've been worked out. This is an example of a startup doing EA-like direct work and for-profit entrepreneurship.
Another startup related to global health is Shift Labs who are developing lower cost medical devices. While they don't directly talk about global health, it does mention in the description that they want t0 "serve the fastest growing healthcare markets in the world," which, to my knowledge, are developing countries. Other startups focused more on general biomedical innovation in medical devices, which is similar to the "biomedical research" benefits of the 80k career profile. There can be seen here.
Besides Global health/ Biomedical Innovation, some of the tags that are EA problems profiles or related problems are: "Climate", "Healthcare", "Biotech", "Digital Health", "Health Tech", "Mental Health Tech", "Telemedicine", "GovTech", "AI-powered Drug Discovery", "Electric Vehicles", "Telehealth", "Diagnostics", "Carbon Capture and Removal", "Drug Discovery", "Synthetic Biology", "Sustainable Fashion", "Genomics", "Agriculture", "NeuroTechnology", "SleepTech", "Fertility Tech", "Oncology", "Cellular Agriculture", "Civic Tech", "FemTech", "Medical Robotics", "Alternative Battery Tech", "Cultivated Meat", "Cultured Meat", "3D Printed Foods", "NanoMedicines", and "Rocketry".
Why should one consider doing direct impact for-profit entrepreneurship rather than solely Earning to Give or Non-Profit Direct Impact?
- Otherwise Earning to Give Founders should consider Direct Impact For-Profit Startup. While there can be tradeoffs between direct work areas and money, it isn't a complete tradeoff and the founders can still make alot of money to donate. I haven't done an analysis on the whether YC founders who focus more on social missions earn less, it can could be argued that it is limiting the options of starting a company can prevent one from selecting the highest valuation one. On the other hand, it does allow one to be forced outside of the group-think of what other people are doing for their startups, which may lead one to discover a secret, as Peter Thiel puts it in the book Zero to One. This increases the counterfactual impact (and from an economic POV, lower competition) by answering the question, "What is an important truth that most people don't believe?" and in the case of startups "What important startups is no one starting?" YC, at least when investing in for profit startups, expects to invest in companies that have potential for high valuations. Assuming they are somewhat rational in their decision for selecting the startups above, they have a reasonable chance for earning-to-give potential. From the original reference post, if direct work is worth a 20% discount per year, it is very likely that startups who can achieve reasonable size (1-10 Billion in valuation) can punch above their valuation weight class compared to 100B+ valuation purely earning to give founders.
- Otherwise Non-profit founders should consider a Direct Impact For-Profit Startup. While it does limit the cause area to areas where there is a large profit potential, for-profit startups also allow for self funding for sustaining and growth of their mission rather than relying on donations. The founders of Wave stated about private investors, "First, the pressure to grow quickly forces us to make our product better and scale faster, so we help more people by a larger amount. Second, since we’ve done really well by for-profit investors’ standards, we can raise much more money than a nonprofit or social enterprise." Hiring top-talent is easier with money. While people may say they want to help the world, they may not act in their ideals and give up their FAANG jobs or may need the money for their families. For-profit entrepreneurship enables one the hire those potential people. Non-profit founders may feel guilty for collecting a profit on the good that they provide. Promising to donate nearly all of your profit personally and encouraging employees to donate heavily as well may relieve some of the psychological burden. Also, one may consider that they would've had a much smaller impact if they had selected only non-profit status. If one still wants to start a non-profit, it is better to collect revenue and be self sustaining since one isn't dependent on donors.
We already have one success of direct-impact for-profit entrepreneurship in EA, Wave. They are valued at $1.7 billion dollars and help transfer money in Senegal and the Ivory Coast. While the founders sold to World Remit for $500 million, that is still alot for potential donations if one owned say 10% of the company.
One non-EA success example is Zipline, who's valuation is $2.75 Billion. They ship medicines in Ghana, Rwanda, and Nigeria, and also the US and Japan as well. I don't know what portion are in the 3 previous countries, so more knowledge is needed.
- (Very Underrated) Information of the impact potential for for-profit companies using Size, Tractability, Neglectedness model and other info: here.
- Post from Sendwave founders: here.
- Sendwave founders AMA : here.
- Analysis of YC giving potential (original quote): here.
- Zero to One by Peter Thiel, good book about how startups and philosophy more generally.
- EDIT: 80k advice for tech founders: Found a tech startup. I believe somewhere it includes the counterfactual reasoning of the founding of google. Useful for counterfactual evaluations for startups in general.