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Esha Chhabra, CONTRIBUTOR | ARTICLE
James Joaquin of Obvious Ventures, one of Silicon Valley’s profit-meets-purpose venture capital funds, says that there is a definite lack of values and lack of moral compass in Silicon Valley.
In fact, Joaquin tells me in a recent phone interview that the Valley’s culture is a popular topic of discussion at their offices.
Turns out, technology, Silicon Valley’s so-called meat-and-potatoes, may not be the answer to social problems -- especially not on its own.
“We had predicted this about 4 years ago, that technology would become the new villain on the global stage,” he says. “As a result, it’s increased our desire to focus on values-based leadership with our CEOs, management teams. Instilling values in a company and pairing that with transparency for employees and customers is the vaccine for some of the problems that we’re seeing in the technology industry today.
Technology, he notes, is having unintended side effects and those in the industry need to be more considerate of that. “We cannot stop automation, for example, but we can ourselves what is our responsibility to society to invest in new tech and new tools to upskill those citizens that are losing their jobs to tech.”
Obvious Ventures, which likes to raise quirky sums of capital (the last round came to $191,919,191), is backing healthy living, people power, and sustainable transport and energy sources. Unlike many other venture capitalists who are heading to emerging markets to show how technology can help humanity, Obvious Ventures has decided to stay closer to home, backing only North American companies for now (with the exception of a recent addition, Lilium, a flying taxi company based in Germany).
Despite the strong mission-driven approach of the fund, Obvious Ventures does not classify itself as an impact investor. Rather, they like to use their own terminology: “world positive.” They’ve even designed a new term sheet that includes the world positive values.
But the clear separation from the impact investment community speaks to Obvious Ventures Silicon Valley mindset: “We wanted to create a new lens on a traditional asset class, which is venture capital. We think we can deliver top-tier venture capital returns where the impact is just baked into the company and the product. You don’t have to measure it separately. You can use revenue and EBITDA.”
Joaquin, along with his co-founders Vishal Vasishth and Evan Williams, is hoping that colleagues in the Valley adopt this philosophy, which could help realign venture capital’s moral compass. “It’s still very hard for mission-driven companies to raise VC money,” he admits. “We’re trying to educate investors that you don’t have to sacrifice profit for a purpose.”
But to do so, they have to prove it first. “If we can show that such values-based companies can be financially successful and global brands, then we’ll have more adopters,” he says.
As of now, there are still few examples that illustrate this mindset. Good Eggs, one of the companies in the Obvious portfolio, debuted its food delivery service with much support and fanfare in LA; but soon after had to shut down operations and revert back to its core in the Bay area. Red tape, bureaucratic hurdles, and flaws in business models create growing pains for these startups as well.
However, the argument for values-based businesses is gaining traction: Joaquin says that mission-driven brands do attract more customers and quicker because of their ethos, as well as retain employees longer. To us, he jokes, “it’s obvious.”
There are limitations, though, to which companies would be suitable for investment. The scale is still very much a part of their approach, which is why Joaquin says that he spends a fair amount of his time these days saying no to startups who just don’t have the “venture capital economics.”
That, ironically, is the bottom line with Obvious Ventures; they are very much so a VC fund, that too in the Valley, and are not shy about it, despite the difference in values at times.
“We want to be measured against other venture capital funds. We want to be measured as VCs. We don’t need to be put in this other category,” he says referring to impact investors.
So can this trio transform Silicon Valley culture by working from within?