EA - Why Guided Consumption can Work by Vincent van der Holst

Link to original articleWelcome to The Nonlinear Library, where we use Text-to-Speech software to convert the best writing from the Rationalist and EA communities into audio. This is: Why Guided Consumption can Work, published by Vincent van der Holst on July 28, 2022 on The Effective Altruism Forum. ELI5: Guiding Companies/Producers are companies where charities own all or almost all of the rights to profits. Guiding Companies can work because they already exist at every scale, are more profitable and live longer than their competition. We think there's high impact in building and buying from guided companies, as well as lobbying existing GC's to donate according to EA principles. TL;DR: We spent the last month talking to more than 100 people (EA's, investors, consumers and brands) about Guided Consumption. The majority of (negative) feedback we got fulls under three categories: You won't be able to fund this/giving your profits away will slow down growth/this can't scale Your assumption that guiding companies have competitive advantages is wrong I want to see data and research that this works It seems that Guiding Companies actually grow faster, are more profitable and live longer than their competition, so the rational option for a philanthropic investor looking to maximize their giving could be to fund Guiding Companies as opposed to investing traditionally owned companies (or even direct donation, provided that there are means of converting equity into cash for charities). With Guiding Companies being more profitable, it also follows that these companies have competitive advantages. The main advantages that we found in research and from our own experience and research were higher employee productivity and retention, higher customer loyalty, lower costs, better alignment with values and mission, higher innovation, research and development and a long-term orientation. We anticipate that the competitive advantages will scale with greater public awareness of their ability to help charities through normal purchasing, the advancement of which is one of BOAS and CPI’s missions. The research shows that, even in the current status quo, Guiding Producers can be competitive, or even have advantages over traditional companies. Of course, BOAS and CPI are interested in changing the status quo for the benefit of Guiding Producers. But establishing the baseline viability or advantaged status even as is provides a floor from which we believe we will be able to climb beyond. We will explain in more detail below, and link to all of the data and research. We still welcome additional feedback or concerns (we still have many concerns, but these are for an upcoming post). You won't be able to fund or scale this To scale a business you need money and a great team, and with money you can hire a great team (although money is not the primary driver for great people, just look at EA). The most common feedback is that investors won't invest in Guiding Companies because they don't get a return, and they are correct. We've talked to big (impact) investors, and they won't fund this. But this world has more than 3.000 billionaires, many of which are philanthropists and investors. When they invest they want the highest possible return on investment (that they can later donate) and when they donate they want the highest possible return on donation (i.e. giving based on EA principles). If Guiding Producers can fund charities more effectively than direct donation (because of their competitive advantage), this could open up a large pool philanthropic investment. Research shows that foundation owned companies are six times more likely to survive over a forty-year period than conventionally owned businesses and having higher economic performance of profitability and market value than private or disperedly owned companies (see page 14 for an overview). If this is true, philanthropists trying to maximize their donations should invest in Guiding Companies because these create better ...