Thanks to everyone who has joined! I'm excited to share this vision for responsible investing with you.

I want to talk about a tweet from Bilal Zuberi at Lux ($4B in AUM). He's been posting a lot about responsible investing and today he tweeted this:

We have more tech on the horizon where ethics are critical. From genetic engineering to Defensetech, weight loss drugs, to Generative AI. Again we should be attentive to INTENTIONS  x   INCENTIVES. And how to engineer + instrument the ecosystem to monitor/avoid misuse.

I couldn't agree more that there are many areas of technological development on the horizon that have massive implications for society. I'm glad to see titans of the industry asking these important questions about how to avoid their misuse. But what are the answers? I think Bilal is close when he talks about intentions and incentives. To me the answer is to lead with intention to design incentives.

The old system to create incentives

If you organize your company following the standard practices then you'll form a c-corp, and legally your only incentive is to create value for shareholders. This creates an increasing disincentive to take innovation risk once you have a system that creates substantial profit, and instead shifts focus to increasing prices and reducing costs ad nauseam. The goal of financial maximization quickly becomes a game of extraction at all costs. Often this is where the incentive to do something good for your shareholders but bad for nearly everyone else becomes impossible to resist. Especially once you become a public company that's measured on short term performance metrics like quarterly profit. There's no room in that system to make decisions in favor of long term sustainability or the greater good.

The new system to create incentives

Contrast this with organizing as a benefit corporation where maximizing value for shareholders is an incentive, but it's balanced with doing what is best for employees, customers, and your stated public benefit. In that case the inflection point that would usually bring about financial maximization and the degradation of innovation, company culture, environmental awareness, etc, becomes about value maximization. Value for shareholders, yes, but for other values which ultimately are good for shareholders.

What’s the point?

I believe the old system drives our boom and bust cycle which consistently drives further and further wealth inequality enabling further and further extraction of resources human and natural without pause for the long term implications. We're now at a point in America where most people can barely afford goods and services, let alone basic human needs like healthcare and housing.

Both of these systems are capital systems, and we can only influence them through the use of capital. Investing responsibly is not about only backing climate tech companies or only backing "good" people. I think most people in most industries inherently want to do and be good to the extent the system enables them to do so without suffering.

Investing responsibly is about recognizing the systems which currently drive negative incentives and destroy the future we want so that we can proactively and intentionally form companies that are designed to create and sustain the future we want.