Profit without purpose (BNPL)

At Mangosteen we start and invest in purpose driven companies. Sometimes people ask how we decide what is purpose driven or how we find companies as if it is a difficult thing to do. It isn’t difficult. I believe everyone (ok most people) has a gut feel for what is right and who good people are (think about it — you know someone who you know is a really good person. The answer is back those people doing something good.

My kids were watching Frozen and there was a message in there:

do the next right thing

Some ancient Disney wisdom for you! but it is right. We create and invest in companies that are purposeful and that are run by good people. We believe that we must get as much money and success to the right people running the right companies to drown out the wrong people running the wrong companies (which is sadly the vast majority!). Good people as I said we all know. Good companies we do by design. We just create them.

Sometimes at Mangosteen it is enough just to find good people and support them in whatever they are doing: for example Luke Swainson and Jane Dunlop who are doing amazing work in Aceh with Aluan, check them out here. Other times we work with good people to design good companies.

Another example is Lucy’s CEO Debbie Watkins. It simply isn’t in her DNA to do anything that she knows is not right for Lucy’s customers. Thats why we backed her.

Am I the only one who thinks that financial small print saying your loan interest will skyrocket (mortgage crisis style!) if you don’t pay on time is really really shitty? Do people learn that this is ok in their MBAs? It isn’t enough to have checks and balances and regulation you MUST have good people. Everyone knows these people. Problem is these guys aren’t often the ones to start fintech companies, and they are not often employed as VCs.

Lets take a look at a case study: the BNPL (Buy now pay later) space. I knew immediately this space wasn’t purpose driven. I made no secret of the fact that I never liked it and don’t like it at all in the way that it is currently implemented (there is a good way in the appendix later).

By its very nature buying now and paying later is not right for people, or the planet. It plays to people’s need to buy things NOW!, which isn’t a good thing for their mental health, or financial literacy. Then when they don’t pay the money back they pay massive interest rates that they often can’t afford and then they default on the loans. Bad Non Performing Loans. There are so many things wrong with it that I will stop writing before I get carried away. I hope that it is clear to everyone. I see you nodding… so my next question is “then why did you invest in it?!”. For money? well there is lots of money in doing the right thing so stop being Donald Trump. There is real profit with purpose money to be made out there!

You know what is right. So just do it.

That is the lesson. We want to make good people doing good things so massively successful that they put the bad guys out of business.

Appendix: how BNPL can be used for good

Imagine you buy a crappy side table from Ikea for $50, you replace it every two years. Why? because it isn’t quality so it breaks or you just want a new one because you are a consumerist victim of advertising and you don’t give a shit about the Ikea table because it is cheap and crap.

You won’t give it to your grandchildren

You wont’ even take it with you when you move. Think about this. It sucks. Throw away culture of cheap non quality. Ikea sucks. You know who doesn’t suck? the local artisan making a great and beautiful table our of locally sourced recycled wood that you will really value and give to your grandchildren. But the problem is that this side table costs $250. And it should because it is valuable and amazing.

You see where this is going right? You pay now for a beautiful table for $250 and in 10 years it pays for itself because you haven’t bought 5 shitty Ikea side tables for $250. Win win win:

  • you get a table you value that you give to your grandchildren.
  • 1/5th of the resources are used because there is 1 table not 5.
  • And the local artisan wins not the massive multinational.

Mangosteen would support this BNPL company, and many BNPL companies say they do this but they don’t. How do you avoid that happening? The CEO must have uncompromising integrity.

What is the solution? Etsy must put Ikea (or Amazon) out of business. That must happen over and over again!

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Luke Janssen

Luke Janssen

Entrepreneur. Founder of Tigerspike (sold to Synnex), Bambu, Silkstone Partners, Lucy, HatchBali.