The Business Of Profit and Purpose

Adam McCurdie  00:08

People can pick up on whether or not something is authentic when you're doing the doing, or something is a company trying to virtue signal for the purposes of marketing.

Dr Juliet Bourke  00:19

Adam McCurdie wanted to change the world for the better. But instead of joining protests or off-setting carbon every time he boarded a plane, he started a software company. 

Because when we talk about enacting positive change at scale, we’re really talking about business. 

That’s why as founder of ticketing company Humanitix, Adam adopted an entirely different business model that put ‘social good’ at its heart.

Adam McCurdie  00:44

And the bar has been raised on what companies have to actually be doing, if they want to be telling the public about how they're making a genuine contribution. And so that authenticity is becoming more and more important and critical in the whole message.

Dr Juliet Bourke  01:02

This is The Business Of, a podcast from the University of New South Wales Business School. I’m Dr Juliet Bourke, a Professor of Practice in the School of Management and Governance. 

Business has a huge role to play in driving social change because of its capacity for scale. So… how can you use the power of your business – and the power of the market – to do good? 

So today, three perspectives on how you can you use the power of your business and the power of the market to do good.

Adam McCurdie  01:25

Humanitix itself is a registered charity, we're a nonprofit. So there is no equity, there are no shares, I, as a founder don't own a large percentage of the company that I'm hoping to sell one day and make a lot of money that does not exist. The big question for us when we started to Humanitix, was can you run a company, let alone a software business without shares, such that rather than the Company's production of profit going to shareholders, which is the point of a company, instead, could you redirect that profit into the world's most effective charities, essentially, replacing shareholders with charity partners, and everything else about the business will run in the exact same fashion, you have to have a compelling product, you have to have happy customers, you have to keep your costs down. And you have to try to make as much of a profit as you can exactly like a regular company. The only difference being is where that profit ends up at the end of the day. And that was made most clean by us not having equity in the model. So there are no shares and no shareholders. And there's also no exit for me as a founder, I am not looking for a better of one of the incumbent ticketing platforms that will hopefully purchase Humanitix and I'll get a big payout. That can't happen, because there is no equity.

Dr Juliet Bourke  02:43

That is very interesting business model. How has it been received in market? 

Adam McCurdie  02:50

Initially, with a lot of scepticism like your question, after we broke through that, it's now being widely adopted by literally 10s of 1000s of event hosts all around the world, who are sick of the old way of doing ticketing, were very willing to switch their ticketing provider for their live event. And they do so for several reasons, not just because we give 100% of our profits to charity, they switch because the platform is now better. The actual software that they're using has features that they can't find anywhere else. Our booking fees that we charge that their customers will most likely pick up are lower than what they've been previously being charged by the incumbent ticketing platform. And Humanitix acts as somebody to talk to and for us to be a real partner to you as an event host to help you set up your event in the right way. Help you with comms strategies and help you with all the things that go into running an event. And then on top of that we donate 100% of profits to charity, and the event host is able to then talk and market that to their ticket buyers that this year we've teamed up with a ticketing platform, that's both lowering booking fees that we all hate paying, and donating 100% of all the profits to charity.

Dr Juliet Bourke  04:02

Talk me through the startup of it. How did you come up with the idea you had a co-founder Josh, the relationship between you – what's that about?

Adam McCurdie  04:10

We've been best friends for now almost 20 years. And the two of us, Josh went down more of a finance career and finance path. I went down an engineering mathematics path in our careers. But we were always incredibly excited to use those skills and form a career that was interesting and unique and had a genuine contribution to society. And that is very difficult to often find in one's career. And we were inspired by many new social enterprises were inspired by the likes of Professor Muhammad Yunus from Bangladesh. He invented microfinance and took millions of people out of poverty. And then more locally, you had brands like Thank You popping up with a product for cleaning products back then bottled water. So you have these kinds of businesses that can produce a profit, and then decide to give away their profit all of it or some of it to produce impact. Really interesting and really inspiring to me and Josh, where we saw the gap was that you're seeing social enterprise cafes pop up, you're seeing like, thank you and fast-moving consumer goods run a social enterprise. That's great. But all the money's being made in software and technology. These are the biggest, most powerful, most influential companies on the planet. And we're the social enterprises in that space. And so it was from that place that we started to look at potential industries in technology and software that could be disrupted with a social enterprise model. 

Dr Juliet Bourke  05:44

Just want to take you to the core of Humanitix access Office is an ideal this feeling of optimism and purpose. How do you sell optimism? 

Adam McCurdie  05:53

Amazingly, in events ticketing, our event hosts are incentivized to help us sell that optimism, we sell the optimism to the event host which is wouldn't it be amazing that 100% of all the profits from these booking fees go to the world's best children's charities, here's what we've done to date. And here's why that would be an amazing fit for your event and for your community. Where the secret sauce really lies is when the event organiser understands that switches their events to Humanitix realises that this is the biggest no-brainer choice they could have made both from a price product and social impact perspective. And then they want to tell their entire community about it. And they want to allow their community to understand the types of values that they uphold the types of things that they care about, and the types of efforts they've been making in order to make this collection of people coming together for this event, something that's consistent with the reasons why everyone's coming together. And previously, you would never talk about the ticketing platform that you've chosen. But now all of a sudden, the ticketing side of things goes from being something that was previously transactional to being something transformational.

Dr Juliet Bourke  07:08

If you're going to run a for-purpose venture, one of the things that's really crucial is knowing your y, you need to be clear on your brand's values. And then you need to live those values. So the market sees you the way you see you.

Adam McCurdie  07:23

Our clients know that they're working with us as being different when they're working with us. Because we have intentionally instilled a few key company values at you Humanitix that we intentionally express daily, predominantly to our clients. Show up, be bold, keep it weird, and the world is not fucked. And that fourth value sounds funny. And it uses a swear word, which captures a bit of attention. But it's very intentional and is having huge impact. And that is that it's all very well to want to do good for the world, and so very well to want to help the planet. But coming from a place of narcissism is not helpful to anyone feeling like the world is fucked is not helpful. Wanting to produce something and contribute something to society is and coming from a place where we don't feel that the world is fucked. We just feel that we can be doing better as a society and taking opportunities where opportunities show up. It's exciting. And there's been a very, very intentional perspective on a social enterprise.

Dr Juliet Bourke  08:33

The ‘for-purpose’ model of Humanitix also extends to how the company evolves over time.  

Humanitix won’t go to IPO, there won’t be a liquidity event where Adam McCurdie and his co-founder Josh exit the business with their pockets lined with cash. Because profit is not the singular focus.

Adam McCurdie  08:53

Adam has no exit from Humanitix, which just of pausing on that point for a moment has created a very interesting perspective as a founder, and culturally inside Humanitix where staff know that me as a founder, Josh, as a founder, we're not going anywhere. We're not saying yay, culture, but really looking over our shoulder for potential buyer, which does have a cultural impact. And that the fact that that's not the case, and that rather, we're investing in here for really forever, makes it a really a life's work as opposed to a business that was the success that will go down on my resume as a as a founder success. And so then what is this life's work going to look like? As we continue to grow and grow the point of Humanitix beyond ticketing and beyond the amount of money that we give to our charity partners, which is creating impact through those amazing charity partners, predominantly, in this case for kids education all around the world is to create a conversation, a cultural conversation. about what a company can be, and the role a company can play in society to be doing its best to provide a contribution back to society.

Dr Juliet Bourke  10:12

Sometimes, like in Adams case, you look for a business opportunity that will support your social cause. It's about how your business responds to customer demand for socially responsible practices. 

Tristan Harris  10:25

I think everybody is becoming more and more aware of their personal responsibility to address some of the very significant challenges we're facing. 

Dr Juliet Bourke  10:34

This is Tristan Harris. He’s the chairman of grocery chain Harris Farm Markets.

Tristan Harris  10:39

People are more and more recognising that they're going to have to change themselves. Because if we all just wait, we're going to be in so much trouble, it's going to, it's going to hurt everyone a lot more by waiting. And so. And I think the beauty of that is, the more people that change, before their governments get their act together, the easier it is for them to get their act together. So it's much easier to say, let's put a rule in place that kind of reflects what everyone's already doing, or the majority of people are already doing that way we just bring the laggards across.

Dr Juliet Bourke  11:13

For Harris Farm Markets it was a simple business decision to follow consumer sentiment around reducing packaging and waste and having more ethical supply chains embedded in the business.

Tristan Harris  11:24

The biggest issue with food waste is not actually the sort of disappointment of wasting good food, it's that there is all of the inputs that are required to produce that food are still required. So we're producing a bucket load of carbon, pumping that in the atmosphere, just to produce food that's drawn back into the ground. And that is unacceptable. And by finding a way to create a market for that food, customers love that, and engaged with it very heavily. And the benefit for them was they got to pay half price. 

Dr Juliet Bourke  11:55

And the solution was just around the corner. Well, in France!

Tristan Harris  11:59

We had always sold fruit that met this kind of criteria, and this was fruit that was that was not quite sort of making the grade for supermarkets. And so people would find an outlet for at some of the markets and outlet for it in some of the food service. Or if they couldn't find enough of an outlet for it, it would get dumped and a lot of food was getting dumped. And then a supermarket over in France, Intermarché, ran a programme called Légumes Moches, it means ugly vegetables, and said, we're going to address this problem by selling this product. And as soon as we saw it, we're like, wow, that's, that's bold. But it's brilliant. And it's exactly what we do. And so we repackaged our programme called imperfect picks, and really went out hard chasing growers and suppliers and said, you know, there's a lot of stuff that we know is being is being chucked out, we won't be able to get you full price for it. But we think there's a lot of demand for this kind of product. And it was an enormous success. From the moment we launched it people absolutely loved it. In the demographics that we serve, there is definitely a desire, our consumers want to live according to their values and can afford to live according to their values more than just I want to get something cheap. 

Dr Juliet Bourke  13:26

But there are trade offs. So what short term sacrifices are you willing to make to achieve long term social impact with your business?

Tristan Harris  13:36

About seven years ago, we really wanted to do it. And we were really concerned about the impact that it would have if we if we just took bags away. And so rather than sort of forcing customers into the position, we went out and said, what we'll do as will offer if you don't use a bag, for whatever reason, if you buy one product, if you buy 50 products, if you don't use plastic bags, we'll donate five cents to Clean Up Australia. And that was much more expensive for us than the bag. But then we also made sure that we had a tonne of old fruit boxes and stuff like that, sitting there near the registers for people to be able to say, Okay, I don't need a bag because I just grabbed this box. 

We came out as the first major retailer in Australia to come out and say, All right, we're getting rid of plastic bags altogether. And we just replaced them with paper bags. And again, that was a matter of just providing the solution. Everyone kind of knew the problem, but nobody really sort of wanted to touch the solution. I mean, a plastic bag was costing us about I think about a third of a cent and when we first did paper bags that are costing us about 18 cents, and we go through a lot of bags, there's you know, there's lots of customers and it's millions of bags a year. So millions of bags times 20 cents makes for a huge problem. And that's why the industry had chosen not to do it up until that stage, we were getting to sort of fever pitch about people on plastic bags. And there were a lot of people that were very displeased when that happened. And then this was just our opportunity to switch the whole game, our total bag usage dropped by 90 odd percent when we did it. So it wasn't as expensive as we were worried that it would have been. But definitely by providing the solution to the customer, at our cost of theirs, our customers again, loved that. Whereas some of the other retailers just took the bags away and said, Now you gotta buy bags for, you know, 10 cents, or 15 cents, or whatever it was and there was a lot of people that were very displeased when that happened.

Dr Juliet Bourke  15:45

Now it’s all well and good to be adopting what you think are sustainable and socially responsible processes. But how do you know for sure you’re getting it right? 

Increasingly, businesses also need to measure their impact in this space. Enter Givvable.. a company that tracks the sustainability of a supplier so that a CEO or director has the evidence they’re getting it right. Frances Atkins is their co-founder. 

Frances Atkins  16:12

Supply chains is one of those areas where it lends itself to leveraging the technology that's available to us, whether it be artificial intelligence, statistical analysis, big data, advanced analytics all that kind of thing, to be able to enhance their understanding of their own supply chain. When you start to look at the supply chain, given the complexity, the breadth of ESG issues and then, you know, typically, large organisations have 1000s of suppliers, that lends itself to a technology solution to get that sort of data to get that insight at that scale requires organisations to, you know, take advantage of what's out there today.

Dr Juliet Bourke  16:52

And while some big businesses are already measuring their ESG targets, it won't be long before this kind of reporting is simply business as usual.

Frances Atkins  17:00

My personal view is that at some point, we're going to have mandatory reporting on a number of these issues in Australia, I think there's a period to go through where there needs to be a more standardised approach, essentially offshore before, they're going to start accommodating some of those things locally, but it is going to happen. That's my personal view, we have corporate clients that have set certain targets. And what we're identifying is not only the suppliers that haven't set a target, and they're not demonstrating any third-party action towards any form of target. But we're also identifying the suppliers that have a mismatch in their target. So you've got a client with a 2040 target and includes the supply chain, and then you've got a major supplier that has a 2050 target that includes their supply chain.

Dr Juliet Bourke  17:43

Frances thinks the real change will come when businesses can see a financial benefit, as well as a moral one.

Frances Atkins  17:50

My view is that needs to trickle down faster to the suppliers that actually hold the credentials on sustainability and give them you know, let them see a tangible financial benefit for that. The challenge with sustainability and across, you know, ESG issues, these things that we are asking our suppliers to do take time, and they require an investment. And so in order to accelerate the action, we really need the suppliers to accrue a return on investment for taking those actions. And at the moment, that's a little bit hard for them to see. I think if we if we take all these things together, customer requirements, both consumers and the corporate buyer, the regulatory environment, the role of finance, and then if you've got corporates and organisations setting targets, all of these combined should help accelerate and drive us higher quality of in terms of addressing these issues.

Dr Juliet Bourke  18:43

But this kind of measuring of social good is also a minefield for businesses.

Frances Atkins  18:48

What's becoming challenging, though, is just the sheer number of these types of certifications and accreditations it can be difficult to understand the scope, you know, the level of audit or verification and what they actually mean. And that's definitely a role that Givvable plays in terms of doing that translation piece. Predominantly, we do that for our corporate and government buyers. But you know, it applies to consumers as well, really understanding what all these things mean. What we're seeing now is that very little if any weight has been placed on self reported claims of suppliers on sustainability and ESG. It really needs to be backed by evidence because of a procurement and sourcing workflow so that the time at which decisions are made. Ultimately, businesses need to be able to run their business. So how do they get this into a workflow? We are seeing organisations increasingly look to third party validated credentials around these sorts of things to avoid the risk of greenwashing. Again, not all credentials are created equal. It can be a very complex space and does require translation, but there are tools out there that do that and obviously give them all as one of those. 

Dr Juliet Bourke  19:52

So for you as a leader, the key is to get to know the tools available to help you measure your social impact, and then set a realistic timeframe to implement your changes.

Frances Atkins  20:03

There really are no excuses for organisations not to take some action on sustainability in the supply chain. There are tools available to them now to get the visibility to get the data to get the insights that they need to start making better decisions. And I mentioned that because the number of times I've heard a corporate say, Oh, look, we're still early on our journey. We're running out of time, we need to start somewhere. And the longer it takes for organisations to take that first step and to take action, we're just not going to meet the targets that have been set for us.

Dr Juliet Bourke  20:35

Adam McCurdie feels the same sense of urgency with Humanitix. It’s this for-purpose model that gets him out of bed everyday.

Adam McCurdie  20:47

I don't know if it's feasible, I don't think it's feasible, perhaps for every company to give away 100% of its profits. I don't think the lesson of Humanitix ought to be taken that literally. But I think what is exciting is when you have an example of a company, genuinely trying its best to give back to society, you can have a ticketing company, that scale, giving away hundreds of millions of dollars every single year, to the best charities on the planet. That conversation is to me the ultimate goal of Humanitix. It's what that does to the conversation of what business can and arguably ought to be doing, rather than a narrow obsession on shareholder wealth, which is currently where we find ourselves.

Dr Juliet Bourke  21:38

The Business Of is a podcast from the University of New South Wales Business School, produced with Deadset Studios. Make sure you follow The Business Of in your podcast app so you’re altered each time we release a new episode. And to stay up-to-date with the latest insights from UNSW’s Business School, subscribe to BusinessThink at businessthink.unsw.edu.au.