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Sustainable Capitalism: A Force for Good in the World

Yesterday I wrote about Wikipedia’s refusal to tap sustainable capitalism to fulfill their mission, instead choosing to rely on donations. I made the point that I consider it a waste of my giving budget to sustain something perfectly capable of sustaining itself. I love and use Wikipedia but any good organization should be self-sustaining if it can be.

That post exploded on Hacker News and on Twitter with hundreds of comments, tweets and posts.

A good number of those comments were focused on the fact that Wikipedia would “lose its objectivity” and be “subject to bias” if it used ads or affiliate links to raise its annual budget.

  • Never mind that Wikipedia could use an ad network to avoid a direct relationship with any advertiser.
  • Never mind that Wikipedia already accepts donations from the corporate interests that so many of the commenters decry as evil.
  • Never mind that Wikipedia keeps the identities of more than 200 of their major donors a secret, not allowing us to know who has influence over them. (How is THAT more transparent than an ad?)

The commenters from this point of view betray a distinct lack of understanding of how the indirect model works, whether we’re talking business or non-profit.

In the direct model, your incentives are focused on who gives you money. Your customers.

In the indirect model, users are the stakeholders who drive the real value. Without users, you have very little. So your incentives change and the person writing you the check is no longer the most important stakeholder in your mission. The user is.

My company, Riskalyze, is a great example. We’re building an incredible free product to help self-directed investors search the world’s investments to find a portfolio that fits them.

And that is spawning a marketplace for investing ideas and execution, which will involve connecting a small percentage of our users with partners, in a way that indirectly makes us money.

95% of our users might never do anything that makes us money, but the indirect model allows us to sustainably empower 100% of the world with an incredible investing tool they would never have had access to otherwise.

Our user community has to be first and foremost in our minds when we make product decisions. We know that maximizing user delight and satisfaction is what will actually drive our growth and maximize our revenue from partners.

Sustainable capitalism, especially as implemented in the indirect business model, is a huge force for good in the world. Wikipedia should give it a try.

  • Anonymous

    i take a several week twitter hiatus and you go and set the world on fire.  nicely done!  most interesting is that the logical and reasoned summary/recap here is comment-less, unlike yesterday’s dog-pile. 

    • http://www.aaronklein.com/ Aaron Klein

      Not any more! :)

      Yeah, I actually wish in hindsight that I’d written this into two posts.
      One about the transparency of ads vs. secret donors. Another about the indirect model.
      Live and learn.

      • http://arnoldwaldstein.com awaldstein

        Few people as articulate as you are blogging about the non-profit model. Do keep writing on this.

        And yes, profit or non-profit it’s a business. But yes, they are different because we perceive them to be.

        Only comment is the obvious one, that direct or indirect, customer is core. Dynamics are different but customer value is the handshake between value and business model in both cases.

        Will be interesting as your marketplace grows and you are driven/tempted to provide services as well. Then indirect and direct become little more than spreadsheet formulas. Marketplaces when they work, take on a life of their own.

        • http://www.aaronklein.com/ Aaron Klein

          “little more than spreadsheet formulas…”

          Wow, how true that is. Very well put. Thanks Arnold!

  • Thomasadair

    I developed a business model that can sell a product/service, and rebate 100% of the purchase, or make the monthly financed payments.

    A for profit model, that is looking for a partner to implement, and change the world. Thomas
    thomasadair@live.com


Aaron Klein is CEO at Riskalyze, a Sierra College Trustee, and an adoption and orphan advocate. Most important: a husband and dad striving to live Isaiah 1:17. More »

Markets change. Do your investments still fit you?

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