When Profit Drops Its Crown

Running a business doesn’t mean you should put profits above everything. Humanity is lucky enough to have people who do business for reasons far beyond making money. Passion and curiosity — not profit — drive the greatest inventions. Business, in its essence, is a tool to earn money. The reasons why people start businesses go far beyond that. But what happens when you toss all the reasons into one bowl? Some do that every day. Sure, the results might appear not to be that bad, but is it so? If you say yes, then stir it harder and try to answer again.

Passion, purpose, and a bit of fun

Each business is unique in its own way. The money-making function of some of them might be nothing more than a side effect. Like gas or electricity for those who like to travel. People start businesses to change the world, to make it a better place. Or to find a like-minded crowd that shares the same ideals. This way, they can do what they have a passion for every day, have fun, and strive for new horizons. Lots of people start businesses only to earn money. Yet, money is the thing each type should handle well.

It’s so awesome to get lost in the excitement of creating something meaningful. It's so great to forget about your own bills and those of the people you hire. To live in a world where you can experiment, win, fail, and repeat this flow for infinity. Money might not be the end goal, but it’s a vital part — something that lets everything you do as a business breathe.

Let's look at some cases and try to learn something valuable from them.

Quirky

Quirky's mission was to democratize invention. They wanted to empower people to turn their ideas into reality. Every Quirky member could submit ideas. The community then commented, combined, and rated them. The top-rated products would receive final designs, patents, manufacturing, marketing, and sales. Quirky managed to gain about $200 million in four funding rounds. But the issue lay at its core. They struggled with quality control and product-market fit testing. Attempts to enter several markets at once were not helping either.

The mission was inspiring! Yet, they grew too fast without a strong foundation. They faced financial challenges and had to file for bankruptcy. Even having lots of borrowed money doesn't mean you have a good foundation. The money you've never earned tends to disappear faster. A solid foundation gives you time and space to adjust your bright ideas and make them work.

TOMS Shoes

Started with a purpose, this company had a mission to support those who can't afford a pair of shoes. "Buy One, Give One" was the idea. For every pair you bought from them, they donated a new pair of shoes to a child in need. Sounds fantastic, doesn't it? It was a hit for a while. But there were things that made TOMS pivot its core idea to avoid financial issues.

Consumers are unpredictable in committing to brands based on non-functional traits. It turned out that a huge part of those who bought from TOMS at that time did so for a different reason. Not to help the world, but to please their own egos. And people are not consistent in choosing the means for that. On top of that, giving free shoes was not a good idea for developing economies. Free donations may sabotage a healthy competition. Local businesses can't develop and grow when faced with an unfair competitor.

TOMS is alive today. It is a B Corp now. Shoe donations are still a part of their activities. They do not agree with the accusations, but they are doing things in a better way now. They ensure that free shoes are not given out outside local charity campaigns. They also started to manufacture in some of the communities they support. They believe it helps to develop local economies. TOMS partners with experts to make an impact in the right way. They are expanding the areas where they can have an impact. Better mental health support, women's rights, and the stop of gun violence are among them.

When you have solid ground like TOMS had, you have the time to make adjustments to the means of reaching your goals. It gives space to make mistakes and to fix them.

Patagonia

Patagonia is a company you talk about whenever you need to give an example of a responsible brand. And they've earned the right to be there. The thing that grabbed my attention was the history of the brand, or better said, its founders. They've earned the opportunity to build a responsible company.

Patagonia started with Chouinard Equipment, founded by Yvon Chouinard and Tom Frost. The first product of Chouinard Equipment was chrome-molybdenum steel pitons. And think about this — it happened in 1965. By 1970, Chouinard Equipment had become the U.S. leader in climbing hardware. "It had also become an environmental villain because its gear was damaging the rock." Yvon and Tom had a dilemma. They wanted to leave no harm to nature and keep making equipment.

The easiest answer was to stop the production line. But was it a good solution? Instead, they put money earned from the old products into developing better ones. They came up with aluminum chocks that climbers could use without damaging the rock. That was a success!

But they didn't stop there. With a solid foundation, they started pushing the envelope even further. New equipment, recycled materials, marketing against consumption. Remember their "Don't Buy This Jacket" ad? That was good! And each time they didn't shut down the old production lines overnight. They let the new, improved gear take over the market in a natural way. Isn't it a smart move to keep profits high?

That's a great example of how to be good at earning money and following your greater purpose. It took them a lot of time and patience, but they managed to build a solid foundation and use it for good. This story inspires me and makes me remember that sometimes you have to go slow to go faster.

Møller-Mærsk

Another "villain" on the list is Møller-Mærsk. Yeah, that Maersk you see on every naval container. I've read a story in HBR that made me include this company on the list. Maersk played its part in the climate change issue, without any doubt. Not in a good way, though.

Now, one of the Maersk's goals is to switch its entire fleet to green fuel. They've started by ordering 19 new container ships. Nice start, and I hope they will move in this direction further. The interesting part is that nobody knew if there would be enough fuel to support that change. But when you're an industrial giant, the power of your decisions is incredible. They've created a strong demand in this market. So it was a matter of time before suppliers appeared. They have plenty of them now. Another outcome was giving clients who rely on transportation a choice - ECO Delivery. From 2019 to 2022, demand for ECO Delivery grew by 170% year on year, driven by Maersk's largest customers.

It is hard to say what the real reasons were behind that move. Public companies tend to overfocus on market value growth. Transportation, as an industry, produces about 15% of greenhouse gas emissions. So we'll see if Maersk is serious about this decision. I prefer to hope for the better. Yet, it proves the fact that being a giant provides even greater opportunities to do good things.

The Foundation

Original photo by zhang kaiyv on Unsplash

The initial idea for this story was a bit different. I was looking for businesses that succeeded while putting profit behind higher ideals. But it seems like for any business, "profit" should wear the crown. Businesses are unique. Some are greedy and see no barriers to becoming wealthier. Others do everything they can to make the world a better place. And even more of them try to balance between. But what unites them is that each needs to put profit on top. And only And only afterward, use the profit to reach their goals. use the profit to reach their goals.

There is a chance I was subjective in choosing the cases above. But what I've learned from these stories is:

Build a strong, sustainable, and profitable business before rushing into any higher-order adventures.

This is the foundation. Even if it puts you farther from your higher purpose, you can't skip this step. You can't cheat by using borrowed or VC-backed money. And building the foundation might take some time. But the stronger the ground you stand on, the more meaningful change you'll have a chance to make.

I was so close to learning this lesson the hard way. Luckily, I had a chance to listen to a person whose experience I trust. The message was similar — build a foundation before doing anything else. And, I'm thankful I've managed to put my emotions, wishes, and pride on hold. It's so funny to understand obvious things. To build something, you need passion, but even more than that, you need patience.

So when does profit drop its crown? Seems like never.