Thanks for clarifying, Vincent! Strongly upvoted.

Hi Mati.

Thanks for your thoughts.

I would push back a bit on your notion that it would only work with memetic matching. Especially if the PFG model were to take off, it may be pretty cheap and effective to signal that a company works for charities instead of shareholders. For instance, one of our thoughts with the Consumer Power Initiative is that PFGs could use a color-variant of our logo to signify a category of charity (maybe red for Global Health and Development, yellow for animal welfare, green for fighting environmental degradation). Essentially though, helping any of those causes, if you're not paying more, or otherwise sacrificing, should give you an edge regardless of whether there's a thematic match.

I also do not know about PFGs acting as charities themselves... I think charities in most places are limited in the degree to which they can participate in the economy this way... But in any case, a company with charities in the equity position can do most of what others can do. This is why I think this model will take off eventually. I just hope EA takes advantage of the model so that effective charities enjoy the fruits of our economies.

Thank you for adding this to those sources. I will take a look at the other entries!

My background is in marketing and this is one of my major concerns as well. People don't behave and buy rationally, and don't accept perfectly rational actions from companies who are "good". We're not sure how people will react to a billion dollar guided company who has a CEO who earns 10 million or that pays workers an unfair wage. But I do believe that if that company is open about why they operate the way they do, and they market the impact from their giving, this will still be an advantage. The company might pay its CEO 10 million, but it donated 1 billion this year to effective charities and that saved 100.000 lives. If you focus on the incredible impact that company has I think the overall value of marketing your charitable giving is positive, even if it is small. We know from Newman's Own that 6 figure pay and increasing prices with inflation are accepted by the general public, so I don't actually think those are issues. FYI I am from Europe. 

The good thing is that even if this makes a small difference to consumers (we agree on that) there's no reason this won't work with effective marketing and infrastructure to fund these companies, although that's far from easy. If a guided company has even a 0.1% advantage to their competition this advantage will compound and the company is "winning" slightly more and the extra profit would be worth the investment from philanthropists. Brad explains this really clearly:

"So, if we define the value of a firm with a normal shareholder set as F(k), I would posit that the relationship between the value of F(c), a firm owned 100% by a popular charity, is that F(c) > F(k). It seems to me that F(c) = F(k) + P, where P is the monetary value of the advantages attaching to the popularity of charities with economic participants  vis a vis the popularity of normal investors with market participants."

Even if P is low, and we argue it might, this company would still outperform the competition. As was discussed before, P is not only from marketing, but also from tax benefits, discounts, free advice/consultancy and improved employee recruitment and retention. My guided company has seen free marketing, advice, consultancy as well as tax benefits and discounts, and our job openings have far more engagement than any I have ever posted for other companies. We have also run a marketing campaign using the ad of our competition and a new ad that focused on us giving away all of our profits and that was clicked on 50% more. We also have traction with brands currently because we donate our profits to charities instead of shareholders, so we're signing more brands and we're taking higher commission because we're an ethical company. We literally have brands tell us "your commission is too high, but we'll pay it anyway because it's going to charity and we love what you're doing". These results on the most important sides of our business; consumers and brands, is encouraging that the value of P is definitely more than zero and perhaps a lot higher. We do have to gain much more information from our marketing efforts to understand how this translates to purchase intent. 

Lastly, I want to say that our researcher just finished his master thesis on the economic feasibility of this business model, and we spoke to all stakeholders (investors, consumers, guided companies, traditional companies and brands). It's still in draft but I will release it here once it's ready to be shared (hopefully within a week). This thesis will have a lot more data and references than this paper so it might address some of the empirical concerns that people have voiced. 

Bad behavior (or behavior irrationally perceived to be bad) from Guiding Companies:

This is why one of the functions of the Consumer Power Initiative will be to do broad-based marketing for Guided Consumption, so that consumers can be aware of their power to do good. 

Imagine a campaign that focused on how much profits the average person generates from their average consumer behavior- maybe $12,000. And we show how if someone was able to get $4,000 of that to some charities, they could  save a child's life. "Don't you want to buy in a way that lets you save people's lives rather than make rich people richer?"

As for consumer response to different activities by companies, the beauty is that charitable investors and other actors will be able to direct their activity in the ways that make sense in response to research and thought This is why one of the functions of the Consume Power Initiative is research.

The (lack of) Bill Gates or George Soros factor:

One thing is that consumers may not be aware of the intentions of an EA profit-beneficiary or they may not be able to trust them to act consistently to it. 

Another thing is that consumers may feel more of a direct impact from a purchase where the profits go directly to a charity they value instead of by buying from a company and hoping that the profit-recipients will act beneficently. You as a consumer get to take credit for the moral act in a way that you don't... It is more like the profit-recipient philanthropist gets all the moral credit.

"At the end of the day you are overestimating how much difference it would make to consumers who are not aware of the distinction without an expensive advertising campaign"

This is why, as mentioned above, one of the functions of the Consumer Power Initiative will be broad-based marketing, such that a mass social movement regarding charities as our economies' beneficiaries will take off.

This sounds ambitious and it is, but a few crucial factors make such marketing feasible and likely to succeed:

1. Very simple ask of consumers: buy what you were going to anyway, but through GC.
2. Scaling of marketing efforts: advertising for broad-based GC affects a much broader set of markets . For instance when Anheuser Busch buys a Superbowl commercial for over $6.5 million, this is in service of a company with annual net profits of $4.67 billion. On the other hand, the same budget for a Superbowl commercial could cover a huge set of companies that have collective annual net profits orders of magnitude higher than one global alcohol company. Furthermore, the commercial would have a simple and clear value proposition for consumers: buy through GCs and benefit worthy charities rather than rich shareholders.
3. Earned media. Most of the world including the public, celebrities, thought leaders, etc. want a world that is more just and sympathize with a lot of the same charities goals that EA does.  A lot of the work will be done by people wanting to ride the wave and see how they can help.

Philanthropic Investors looking to create Guiding Companies will have to pay a significant premium

In the proper contexts, once GC is established, the opposite might hold in circumstances where there are multiple incumbents in a low-differentiation market space. The philanthropic investors could threaten to significantly diminish the value of competitors by purchasing one, thus starting a  reverse bidding war.  For a (admittedly rosy) picture of how this might play out see this response under the heading "So, for a simple example to illustrate what I would be thinking of doing- "

Humanitix is a great example, turning something super annoying into good! I will try and reach out to the founders to learn from their lessons. 

And don't get me started on GIC, what a concept! I have subscribed to your newsletter and will follow it closely. Great to see more people interested in this model. I might reach out to you as well to learn from what you've learned!

Just got a chance to read the Global Income Coin and the project of generating a global UBI through seignorage sounds promising and interesting. I'm looking forward to the Zoom call next week and looking for opportunities to potentially work together.

Hi Jo! 

I am very grateful and delighted with your serious and thoughtful engagement with my thoughts.

Firstly, I would note that Guided Consumption is not a panacea.  A world of Guiding Producers/Companies could still be one in which structural relations between labor and capital result in workers not getting their due. It is unlikely that all corporate behavior of Guiding Producers would be totally unimpeachable. However, although Guided Consumption does not solve every problem, it tends to direct the fruits of economies from the least needy (wealthy shareholders who have the capability to own components of the means of production) to the most needy (beneficiaries of charities such as the global poor or potentially the billions of animals that are tortured through the factory farming process). In my view, allowing the perfect to be the enemy of the good, thus choosing not to explore the possibilities that Guided Consumption may allow, is dreadfully mistaken. That being said, even in a world where Guiding Producers/Companies that serve excellent and effective charities, there are likely going to be other political and social projects  to engage in to work for an even more just and happy world! 

You appear to have two premises, one unbolded, another bolded. Your unbolded premise, that Guided Consumption does not solve every injustice in our economy, is one I agree with, as noted above. As for your bolded premise, I would disagree because your claim is too strong. You contend that “I don’t believe that this factor alone is a deciding business advantage over another business with similar products. It would be one factor of many at best.” A business advantage, like advantage in other competitive contexts, has the potential to be decisive depending on the other factors involved. Certainly, there are contexts in which profit destination is less likely to effectuate a large market advantage; I used a restaurant as an example where profit destination will often be lost in a crowd of other factors. However, even in that context, charitable profit destination (“Designated Funding Destination”, or “DFD” as I define it in the longer paper) would provide some advantage. But the strength of that advantage would depend on that context, some of which would be imply greater advantages that would imply greater profit opportunity.

"Structurally, there is no reason that a Guiding Producer would produce goods and services at a higher cost."

This statement is true, albeit more modest than you appear to be suggesting. You correctly note that actors in our economies have different competitive advantages based on the factors such as vendor relationships, payment history, location, distribution mechanisms, and many more. Consequently, the results of competition between the actors that compose firms, including investors, depends on a wide variety of factors. What I mean when I say there is no reason a Guiding Producer would produce goods and services at a higher cost, I simply mean that having a popular charity as recipient of producer surplus instead of wealthy shareholders confers an advantage. This advantage is not balanced by any other structural disadvantage. A firm with a popular profit destination is strictly superior, competitively speaking, to the same firm with a neutral or unpopular profit destination. Of course, a Guiding Producer does not get to compete with its pre-acquisition self, and it may not outcompete the other competitors with a less popular DFD. So, status as a Guiding Producer is not a magical aura that will automatically optimize for all the factors, and thus success is not guaranteed, but it does create an unalloyed competitive advantage along one dimension that is broadly applicable across market sectors.

I believe that a metaphor may be helpful in conveying the power of charitable profit destination. Consider the economy of metal goods in the fictional medieval world of Profitos, where, on the island of Popularis, the metal Charitium is discovered. Charitium is as strong, durable, and otherwise useful as the other available metal, iron, but is significantly lighter, making it more useful as a component in the vast majority of applications. Now perhaps, in some contexts, this advantage is hardly important, such as regarding horseshoes. So, incumbent talented blacksmiths can produce better iron horseshoes because their superior skill and/or other available resources can make for the best offerings, even though, theoretically a Charitium horseshoe would be better. However, in the context of a sword, the significant weight difference implies a battle advantage that allows the swordsmiths with access to Charitium to monopolize the sector such that iron swordsmiths can only produce swords that are useful for resistance-training.

Very high amounts of Charitable Equity in firms in our world will be like Charitium in Profitos. Although in many sectors the advantage conferred will not necessarily imply dominance given other firms’ short-term advantages which proceed from their incumbencies and economies of scale. However, in some contexts, Charitable Equity in firms would allow for decisive advantages. For instance, maybe you could fund the salary of realtors or life insurance salespeople in exchange for their commissions with resultant Guiding Producers that are no less competitive (I know there are a variety of adverse selection or other arguments here, which I could address at another time- my point simply is that in some contexts Charitable Equity could be more potent or lack issues that may affect other economic contexts). As the public becomes more aware of Guided Consumption, the advantage of Charitable Equity will become more potent, and I anticipate that Guiding Producers will proliferate even to sectors where its advantage is not as important. One of the functions of the Consumer Power Initiative will be researching and reasoning so that we can identify the contexts in which Guiding Producers can thrive in the early stages of Guided Consumption so that an even more fulsome presence in the economy can soon be achieved.

So, to summarize on that quote, I think you took my statement as being stronger than it actually was, and Charitable Equity does not magically eliminate all other competitive factors. It does, however, add a dimension on which a firm can be almost always“strictly superior”, which I believe will allow for general economic proliferation.

"In low-differentiation sectors, it may be easier to construct a 'no-brainer' where a consumer is genuinely ambivalent as to two products."

This issue is one that I address more fully in my longer post, particularly in Section III. So, you are correct that it is unlikely that we can create the perfect no-brainer situation, however, this does not mean that we can’t get close enough to obtain large market-share capture or even monopolies in some contexts. This is even more evident when one considers the advantages from positive discrimination from other economic participants (see BOAS’s free consultants, lower advertising fees, higher commission from suppliers) and essentially tons of free advertising from a social movement for companies that serve charities.  I believe what this critique fails to appreciate is that Guiding Companies will have the benefit of professionals managing and directing their affairs just as normal companies would. Why would not these structurally advantaged entities not tend to outcompete normal firms?

“People all over the world choose the ‘lesser of two evils’ in the political contexts routinely”

I think that your formulation of my thesis is a strawman consisting of a stronger thesis than I am making (no attribution of bad faith or any ill will here, I most appreciate your comment!). Like you say, Charitable Equity is only one factor in the competition among firms. Thus, it is not, by itself, a guarantee of success, but rather a broadly applicable structural advantage. However, this broadly applicable structural advantage, in conjunction with tactical and strategic participation in the economy by charitable investors working in conjunction with the Consumer Power Initiative, can still be transformative and revolutionary.

Is a given sector, such as the cost-competitive production of chicken products, fraught with moral obscenity? Then enter the vegan and cultivated meat space, using profits to promote systemic changes that can create a more just relationship between humans and animals. There is one question as to whether significant moral impurity would be ruinous for Guiding Producers’ competitive advantages (I am inclined to think that they are not), but this question is besides the point. Charitable investors can choose the sectors in which Guiding Producers/Companies operate!

The positive or negative competitive advantage of acting badly is also contextual. In some, such as factory farming, evil is profitable. But in other contexts, consumers pay premiums for companies that behave scrupulously. This phenomenon is known as conscious consumerism. More generally, the tendency of economic actors to do good or ill is largely a function of the features of the systems in which they operate. The utilization of charitable equity to create structural competitive advantages to do good is a way to construct sustainably virtuous systems.

As for why Newman’s Own and Bosch are the exceptions that prove the rule? I just think there’s something very counterintuitive about the notion that the best way to solve global poverty would be to buy out a ketchup company for rich countries. There have been long-running mores requiring modesty and forbidding flaunting etc. regarding charitable activity. The merging of the philanthropic and business, so flagrantly using charities for marketing merges clashing worlds in a way that is almost forbidden magic. There have been isolated cases of Guiding Producers, but not a concerted effort to weaponize identity in the manner I propose.

Thank you for your time as well.

-Brad

Hi Jo,

We agree that profit has contributed to many of the problems that we face. We also agree that profit for non-profits is one factor among many, but I disagree that this is always a small factor. I believe it's a small factor in some businesses (e.g. the restaurant example, where you're going to go with the best marketed, top-reviewed and most tasty option) and a bigger factor in other business (e.g. buying from an insurance broker, where two dozen brokers are all selling an identical product and one donated all profits to charities). 

But let's assume it is a really small factor and suppose two identical companies (an online marketplace), where one is purely for-profit, and the other donates profit to charities, start. These companies need one billion in funding to generate 10 billion in future profits. The for-profit company gets the billion from VC because the expected value is 10 times the investment. In the current state of the world, the company directing profits to charities doesn't get the one billion because there is no VC like EA infrastructure to fund it. But if such a structure existed (e.g. SBF donating/investing the billion), the company directing profits to charities would be able to take off and donate 10 billion to charities over its lifetime. Again, both of these companies are identical, and let's assume they have a 1000 differentiating factors, only one of them being the profit destination. With all things being equal, the company who has 1001 differentiating factors would win. You're right that the reality is much more complex, and you're right in saying: "It is not safe to assume that because a business purchases, manufactures, and distributes the same or similar goods, their up-front cost is the same and therefore the cost to the consumer is virtually the same." But these are factors that are relevant to both for-profit companies and guiding companies. Statistically, if you start the above company a 1000 times you would have 1000 different outcomes, but even with an additional differentiating factor (assuming it's positive), the odds of the guiding company to win are higher, even if that's just a very small percentage. And that should warrant investment in them.  

In reality I think companies have less differentiating factors and a company that donates all profits to charities has more than 1 extra. A couple are named in the article and a recent blog on this forum also hinted to another advantage which is going to be really important for success, employee recruitment/retention. I have found this to be true for my own EA startup, which directs all profits to charities. 

So the crucial part that seems to be missing at this moment, is an infrastructure to fund guiding companies. If I start a for-profit, I can go to investors, and if they like the team, the numbers and the idea they will invest in it. This doesn't exist for guiding companies, but if it did, I don't see why guiding companies couldn't do at least as well as for-profit companies (if people don't at all care about the profits going to charities) or better (if people do care). 

You raise a very interesting point about for-profit companies being dependent on coercion, exploitation, etc. I think that's true for many of the biggest companies, but not true for smaller companies and I don't agree that it's always necessary to be successful, but it is in most cases. I genuinely think that some of the biggest companies in the world can be ones that are mostly good (e.g. Patagonia or FTX). I say mostly, because any billion dollar company will make mistakes. I don't think businesses whose sole purpose it is to do good always have to use coercion or exploitation, but I agree that they sometimes have to. Personally, I don't start businesses who rely on these methods, but I do think creating companies that have to use coercion to compete and that donate their money to charities are still a (much) better option than we have now. Government has to work together with guiding companies to create a playing field where these methods can't be used anymore, but we can't wait for that to happen. 

Hi Madhav,

Thank you for your thoughts.

On the commodity issue: the reason that it is hard for firms to get an advantage in the commodity business is because no market actor can offer a better product at a better price than any other market actor. Now imagine, in a commodity space that one market actor was able to produce a more valuable product without incurring additional costs. This market actor would tend to monopolize that commodity market, provided that other market actors could not secure the same advantage. This is the situation that Guiding Companies are in because costs are no higher for them, yet they have an advantage with other market participants, including consumers. I am positing, and believe strongly that research will substantiate this, that consumers will value profit destination at a nonzero level. In the commodity space, this advantage should be decisive. In sectors with more differentiation, it is less likely to be decisive.

Your commodities of scale point definitely makes sense. It will be difficult to compete without hundreds of millions or billions of dollars. This is why research and working on educating the public is critical to satisfy charitable investors that the targeted creation/acquisition of companies that serve effective charities is best use of their resources.

Your point regarding alignment of practices with charitable shareholders is a good and interesting one that will require a lot of thought regarding how to best organize. One solution would be to pair industries with these issues with charities in different cause areas. Another would simply be to create Guiding Producers in other industries that lack those moral concerns.

The starting place for CPI is likely going to be entry into areas where we can compete without huge economies of scale. We are super interested in input from sharp economic minds like yours to map out this path.

There also has not been a particularly concerted effort to massively market this ownership.  For instance, I have never heard of negative advertising against competitors, which I imagine could be really powerful. "Buy from our competitors and you make some rich person a bit richer; buy from us and you help save lives."

Foundation or charitable ownership has always been incident. CPI is working to make profit destination a salient feature in consumer choice- perhaps other factors will warrant the choice of a normal company, but the possibility of doing good is at least in the mix. 

Also, the fact of outperformance by existing Guiding Companies at least suggests that it might serve as an advantage, even if this fact is not emphasized.

I am suggesting that strategic investment by EA or other philanthropic investors to create Guiding Companies/other Guiding Producers will allow for a huge profitable return.

For instance, in life insurance sales, there is little to differentiate salespeople  within an agency (they are all selling  the same products at the same costs), but they could make millions of dollars and capture a huge portion of the market for life insurance sales if they advertised that their commission would go 100% to charity. Paying 400 life insurance salespeople $120k/year, distributing them across states and agencies, would cost $75mil/year, but they could potentially  capture a significant portion of the market with a viral campaign (why not save the world while protecting your family?). And compensation of $200k/year is sufficient that we could capture talented salespeople and pay them more than what they had otherwise made. So if they generate $2 .5 billion in sales, that is 33x ROI. 

The reason that this could be so effective in sales commissions contexts is that there is almost nothing to differentiate salespeople (they are all selling the same stuff) and there are people that already want the product, so it makes sense for those consumers to buy the exact same stuff in a way that benefits a charity.

So, I am suggesting that strategically deployed charitable investment in conjunction with a broad-based marketing campaign could enable outsize market capture from a small investment.

Also see my response here under the heading "So, for a simple example to illustrate what I would be thinking of doing- "

Hey Gee.

Yeah. I think that there are several sets of target customer bases.

One would be the super conscious set of consumers that would be seeking out the opportunity to do good through purchases and would be very excited to learn about Guided Consumption. This set of is analogous to "early adopters" in other contexts. They would value purchasing through Guiding Companies significantly, and would purchase such products even if they had to pay a slight premium. Given that some of the early forays into Guided Consumption will not necessarily be able to exploit economies of scale such "early adopters" would be especially helpful in the early stages.

However, the set of consumers who place a non-zero weight is the vast majority of all consumers: non-psychopaths. Consequently, once the Guiding Companies have the economies of scale to be price-competitive with multinational firms, they should have an advantage with every consumer (the "no-brainer"). Given that advantages with other participants in the economy could allow for costs even below competitors, it seems Guiding Producers in a developed Guiding Economy should tend to monopolize their sectors.

What's rather intriguing is to consider contexts in which Guiding Producers can be super competitive even without huge investments. For instance, you could pay a realtor or life insurance salesperson a salary in exchange for their commissions and then commit those commissions to effective charities and advertise this to prospective clients. I would think such Guiding commission-based employees could be a compelling example of early Guiding Producers.

I think Guided Consumption works across multiple generations and for somewhat different reasons.  While I believe all generations would like to do better for the world (and this could provide an easy, natural and "low cost" way to do so) it's worth considering the very large population of retired and retiring boomers as a fertile pool of high value labor.  As evidenced by the recent drain of experience from corporate America due to the relatively affluent, aging population retiring, there is a very strong pool of knowledgeable people with a) more time on their hands than they know what to do with and b) a growing motivation to give back in some meaningful way as their personal priorities change.

Many retirees who have spent decades in the working world in which a significant portion of their self-worth and social interactions were formed are struggling as they move into the next phase of their lives especially after many of their bucket-list items have been either checked or reevaluated.   Even if there is no personal financial need there will likely be a real demand for opportunities for retirees to retain or regain some of this structure, especially if the fruits of their labor can more directly and reliably do good for others than was likely the case during their working years.   As Guided Consumption gains more traction and clear needs and opportunities are created, experienced individuals are available in unprecedented numbers to participate in the creation or staffing of either supporting organizations or even the Guided Companies themselves and very likely to do so at below market (or even no) cost.  Talk about an business advantage!

The question isn't whether consumers would oppose high CEO pay of a Guiding Company/Producer, but rather whether they would choose that company over a normal company that serves normal shareholders and also has high executive pay. If you're a consumer and you're choosing a normal company's product over a Guiding Company's product due to high executive pay, you're cutting off your nose to spite your face, because you are enriching shareholders instead of charities.

It may even be they Guiding Companies can compete better for executive talent because of the social cache of leading an organization that generates $100 million/year for effective charities. Sure, normal fortune 500 companies can offer 10 figure yearly compensation, but a major Guiding Company could not only pay well (perhaps not quite as exorbitantly) but also grant one tremendous social status and the psychological benefits of being able to do lots of good through your job.

The benefits from actors across the economic arena - consumers, employees, consultants, advertisers, vendors- will allow for enormous advantages for Guiding Companies over regular companies. It just takes enough people to realize that the power of Guided Consumption.

Guided Consumption just needs (as was noted in the previous post by Tomer_Goloboy) to hit a social tipping point. Because right now, there's a strong status quo bias that is not fully appreciating the structural advantages that Guiding Companies will have.

And in case it's interesting, here is a slide presentation of a talk on this paper I gave (a long time ago), which includes some of the empirical analysis at the bottom (which was dropped from the published paper).

You're making the same mistake in understanding my proposition that a lot of my economics professors made that I am discussing charitable "bundling" (although after discussing with my professor from U of C, he understood better than what I was proposing). I must not be writing clearly.

Just instead of thinking of "donations" think dividends. Charities are simply occupying the same place that shareholders normally occupy. Thus, there is no reason it would be "taking a loss" any more than any other firm that has owners. The identity of an owner does not necessarily imply higher costs. Just as individuals trade ownership positions every day on the stock market, ownership could go to charities without jeopardizing performance.

I'm sorry you find my thoughts so misguided.

Re People's stated preferences contradicting actions:

Perhaps people indicate their willingness to make sacrifices to a much lower degree than what they would actually act upon. However, there is not a structural reason that  equity ownership by a charitable foundation, as opposed to other passive investors, would increase price. Thus, given adequate capitalization for the context in which they operate, there is no reason Profit for Good businesses would be less able to compete on price and quality than normal for-profit businesses. It amazes me that you and other critics seem to think that there is zero preference by consumers and other economic actors for charitable causes vs random investors. You mention that other factors may overwhelm this consideration, but provide no reason for thinking that Profit for Good businesses would perform worse on these other factors (other than access to capital, which I will address). In fact, if there are contexts in which PFGs can match the other factors, leaving little differentiation but profit destination, this small advantage could prove decisive (similarly to having a small speed advantage in a race is the difference between gold and naught). To summarize on this point, I think that it's quite plausible that people would act consistently with their statements where they don't have to give something up contra a kidney donation where they do. 

Re Cost to being a PFG rather than normal company:

I'm saying that having one particular kind of entity in the shareholder position, as opposed to other passive investors, does not tend to increase costs to the business. Ownership composition changes every day in normal businesses on the stock market. If a philanthropist were to buy out a company, putting its stock in a charitable trust, and kept management the same, then there is no reason to think the company would perform worse along other metrics. So, if there is any value (consumer tiebreaker effect, talent acquisition, business partnerships) to other economic actors, ownership by a charitable foundation would confer an advantage.

Re Capital Acquisition disadvantage:

You're right: currently there is access by for-profit investors that enables scaling and its attendant advantages that is much less available to Profit for Good businesses. But just as there are entities who are interested in making money for themselves, there are also entities interested in making money for charities: philanthropists and/or patient philanthropists (people interested in investing to be able to donate at a later date). The key to unlocking philanthropic dollars as a source of capital would be establishing evidence that Profit for Good businesses outperform normal businesses. If this theory is correct, capital should become available through philanthropists who are motivated to get more money to the causes that they care about. As the evidence becomes even stronger, access to traditional investors should become available through debt enabling leveraged buyouts. The disadvantage on capital acquisition will dissolve if evidence is established to prove my theory.

Re Companies seldom advertise ownership:

When I'm going to the grocery store or convenience store, for most products, there is not conspicuous advertisement of who owns the business.

Social Enterprise/B Corp:

It is great that businesses are doing this, but there are a few reasons that I think focusing on profit to charities is particularly powerful:

1. Money to effective charities is extremely efficient at doing good. 
2. Focusing on doing good through business activity rather than business profits tends to increase costs, or else this would be the industry standard. On the other hand, if you keep business activities the same, having a different owner (a charitable foundation) will not tend to increase costs for the business.

Thus, I think that focus on profits to charities is warranted.

I urge you to think more carefully about the fact that business performance is affected by the choices of economic actors: consumers, prospective employees, other businesses. Small advantages among these members could compound and make it difficult for firms without access to these advantages to compete.

The link is to be https://purpose-economy.org/en/purpose-foundation/ ,
very interesting document,
if anyone wishes to discuss, please meet me via http://linktr.ee/uhuge

Yeah, if it is the case that the "Purpose Orientation" aspect of "Responsible Ownership" means that profit goes to donation, reinvestment, or covering capital costs, then such businesses would be Profit for Good businesses.

Yes. In Germany, I think people are aware of Bosch's charitable ownership, but this is seldom known by the broader world. I'm looking to look more into Bosch for insight.

I would be interested in learning of more companies like this.

EDIT: and that is an example of a Guiding Producer/Company. If you look at my larger essay, I note the conditions of Guided Consumption. You basically need networking and communication in addition to the existence of Guiding Producers/Companies. But Bosch and Newman's Own have definitely been able to do well... I suspect they would do even better if there was a social movement buttressing them further.

EDIT2: Keep in mind Bosch and Newman's Own took off prior to the age of the Internet. There may be more potent ways nowadays to further movements.

I suspect the main reason is just that regular for-profits can attract far more investment, because they attract investment from investors who want the profits for themselves, not given away to charity. This allows them to scale faster and bigger, and for more of them to exist. EDIT: And then economies of scale or other benefits from size (recognition, network effects) may favour them further.

If something is a mostly or completely non-profit company but takes (or starts to take) private for-profit investment, two things could happen to cause the non-profit shares to remain low in total value:

1. It could scare away for-profit investment, because investors may be skeptical that the company will prioritize profits over helping others or being ethical. Then the company struggles to scale.
2. The company attracts significant for-profit investment and scales, but then becomes a primarily for-profit company.

Also, with easier access to financial capital, for-profits could potentially sell below cost of production for longer than non-profit companies to drive out competition and increase their market share.

You could also just compare the size of all philanthropy vs all investment. The funding available for non-profit companies would be relatively tiny, so we should expect few such large non-profit companies. These non-profit companies would be funded initially or acquired through philanthropy. There's just much less money for this, and this is just one competing use of philanthropic funds, with some alternatives being to donate directly to charitable work or invest more broadly in the market.

Thanks for raising these points Seth. I agree that the burden of proof is higher than what we currently have. This paper and the companies that some of us are building are just the start of proving that this might someday happen. 

I think it's critical to note that guiding companies are basically for-profits. There's nothing distinguishing them  from for-profits except that the profits go to charities and that the investors are philanthropists buying out companies or funding new guiding company initiatives. 

The good news is that there's one large successful case with Newman's Own, who have donated about 570 million USD to charities and give away all of their profits. There's more smaller projects that are successful and donated millions, but nothing that I know of that's close to Newman's . I see one big difference between Newman's Own and the other initiatives that are less successful: money.

I hired a research intern to validate that and he's now drafting up his thesis on the economic sustainability of this business model (I can share it here once it's done), and the main conclusion is that the issue with this is money. If you have someone like Paul Newman funding your guiding company there's no reason it can't be big, and that turns out to be true, because Newman's Own is a multi-billion dollar company in a very competitive space. If the wealthiest philanthropists put their weight behind this and "invest" in the next best guiding companies, I don't see why these companies cannot be the biggest in the world. With the money you can hire the best team, and the best teams build the biggest companies. Currently, the infrastructure (venture capital, stock markets, etc.) are lacking for guiding companies, but these can be built. This will take a long time. 

To answer your other questions, I have no evidence that any Fortune 500 company tried this, but I don't think that kind of initiative would be public. You could argue that Warren Buffet, who intends to give away almost all of his wealth, is buying and investing into companies to generate more profits that he can give away to charities. But that's indirect. Why hasn't he bought a company and turned it into a guiding company? Twitter and EM are an interesting example as well. Maybe EM would use Twitter to fund his next EA endeavor (e.g. backing up humanity to another galaxy). Would Twitter be a guiding company in that case? 

SBF ran an excellent company and made billions by running a normal company. He did not use the fact that he would use the money he earned to donate to charities to gain an advantage with consumers. What would make FTX a Guiding Company is if he had donated his equity ownership to a charitable trust and advertised this to users of his product as a basis to choose FTX over competitors.

FTX and SBF do not resemble Guided Consumption because they do not use consumer sentiment to gain an advantage.