What social entrepreneurs can learn from Medium’s business model shift

Medium is trying to change its business model.

I. For-Profit Business Models 

In the for-profit market, you can only sustainably solve problems when the solutions generate profits.

Overarching visions (bringing the world’s information to everyone) are brought a little bit closer through sound business models (ad driven internet searches).

The profit requirement is useful in that it ensures entrepreneurs add value to other people in their quests for solving great problems.

But the profit requirement is also limiting: an entrepreneur might complain that the quickest path to solving the far problem is not solving one close problem after another.

II. Non-Profit Business Models 

In the non-profit market, philanthropy often determines what problem an entrepreneur can try to solve.

This is useful in that philanthropy is not bound by solving profit generating problems.

But the philanthropic model is also limiting: when there is no need to add value to other people, bad endeavors can go on for far too long, thereby reducing the amount of funds available to good endeavors.

 

III. The Risk of Each Model 

In the for-profit market, entrepreneurs need to guard against the fact that solving close problem after close problem may get them off the path from solving their far problem.

This is what Medium is struggling with.

In the non-profit market, entrepreneurs need to guard against the fact that trying to solve the far problem will lead them down a path where lack of accountability prevents them from adding any value to others (despite expending large amounts of resources).

A lot of social entrepreneurs and philanthropists struggle with this. They set out to solve far problems without understanding the near problems.

Most often, solving near problems better trains you to solve the far problem.

Social entrepreneurs should keep their eyes on the far problem, but they ignore near problems at their own peril.

Medium had the discipline to recognize that they were solving close problems that were not leading them to solve their far problem.

Social entrepreneurs need to have the same discipline in the opposite direction: they need to recognize when an elaborate plan to solve a far problem is a wasteful quest that ignores real people’s acute needs.

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