What is a Social Enterprise?

The name “social enterprise” may not be the best set of words to use as a label for the new type of company we champion, but it has become generally popular, so we use it. It’s also generally ambiguous, so let’s take a moment to define it.

At Hyperspace, we define a Social Enterprise as a company that has a for-profit business model and a for-good purpose that are of equal importance. Let’s break this down.

A For-Profit Business Model

This means the company has a sound business model that sustainably makes money. As a society, capitalist markets are the most efficient economic model we’ve invented so far. We believe in mostly-free markets and companies competing within them. Social enterprises are not nonprofits. They need to compete and win to earn their market share.

A For-Good Purpose

We define “for-good” as something that improves quality of life. We include all life in this statement, so an organization protecting endangered species qualifies just as well as an organization working to end world hunger for humans.

The purpose must be specific. We’ve been approached for investment by companies that say “We employ people so we’re a social enterprise.” This doesn’t count. “We break cycles of poverty, violence, and recidivism by hiring employees from disadvantaged backgrounds and training them with the skills to launch careers” does count. (By the way, this is what Homeboy Industries does, a social enterprise we admire.)

While the mission statement may be broad, internally social enterprises track their impact against specific goals just as rigorously as they track their finances.

Equal Importance

Profit must be equal to purpose. This is easy to say and much harder to adhere to. For the sake of brevity this explanation will be slightly simplistic. Fundamentally, a social enterprise will not do something that is contrary to its purpose, even if doing so would be profitable.

We believe social enterprises matter because pure capitalism is efficient but short sighted.

We live on a planet of renewable but finite resources, so by necessity companies must operate with sustainable models. Money is fundamentally just an idea. None of us can take it with us when we die, so acquiring the biggest pile of cash sounds like a lousy life goal to us. It’s a means to an end, not an end in itself. This is why our mission is to accelerate social enterprises startups into leading global companies. We think this is a viable solutions to current economic problems, and a worthy challenge to pursue.

If it turns out we’re wrong, we’ll evolve. Until then, we chase this mission with everything we have and everything we are. If you believe this too, then come join us.