Startup leaders are increasingly attuned to the impact their business has on the world. It’s no longer enough for many founders to just build a financially successful company, they also want to build a company that has a positive impact. Shahrzad Rafati, the founder and CEO of BroadbandTV (BBTV) is one of those leaders, building her business with a focus on the quadruple bottom line: impact on people, impact on the environment, impact on global communities, and impact on fiscal growth.
In an Elevate roundtable conversation with Margaret Stuart, the Canada Country Manager at Salesforce, Rafati explained her view that operating ethically is a smart financial decision, and shared how other founders can create broader impact through business.
Startups as a platform for change
Razor Suleman, Elevate founder and Stuart’s co-host for the discussion with Rafati, said that his generation grew up with the concept of “shareholder capitalism” that required only financial gains for success. Now, he said, we know better and need to think about “the concept of using business as a platform for social change.”
Stuart said this sentiment echoes Salesforce founder Marc Benioff’s view on how business can give back to the world. The company has instituted a program to donate one percent each of its product capacity, employee time, and financial resources towards philanthropy. The program, now referred to as the 1-1-1 Philanthropic Model, started because of early Salesforce employees pushing Benioff to build a business that targeted more than financial gains.
Rafati agreed with this approach, sharing her belief that businesses cannot become a platform for social change if you don’t start with your own employees.
“Listen to employees because they have incredible ideas,” said Rafati.
From there, Rafati said leaders have to measure the KPIs of their impact goals – employee wellness, environmental health, supporting communities, etc. – with the same veracity and structure they apply to their financial goals. In order to do that, Rafati said that founders “need short term and long term plans for all KPIs,” and that budgets should not just tie to financial gain, but all of your bottom-line goals.
“It’s not just about your values, but your practices,” said Rafati.
Too small is no excuse
BBTV has now gone public and counts hundreds of employees on its payroll, so Rafati is keen to tackle large problems like gender equity throughout each level of her company. The goal of that effort is the creation of strategy guides other companies can leverage through her work with the G20 Business Women Leaders Task Force. However, she also realizes these kinds of outcomes – for example, a gender-balanced engineering or executive team – are incredibly difficult at smaller-sized organizations, where metrics can change significantly with each new hire.
For smaller startups worried about not hitting every single “impact” metric, Rafati advised startup leaders not to force a fit, but instead to lay the foundation with an eye toward the future.
Continuing the gender parity example, Rafati said it may not be reasonable to find an even gender split on a 10 person team. However, Rafati said there’s still a lot a small startup can do to set the foundation:
- Ensure there’s no gender pay gap so women in the company make the same pay for the same work.
- Implement non-discrimination policies and equitable hiring practices for all roles when you’re small, so they will scale with your company as you grow.
- Set up a good talent pipeline with multiple, diverse candidate pools that will help you get to gender parity when you’re scaling up to 25 or 50 employees and beyond.
Business leaders have an opportunity to set the example as we strive for equal pay around the world, even during difficult times. I'm proud of @broadbandtv's commitment to equal pay, and that we've achieved a 0% pay gap. Equal is equal! #EqualPayDay pic.twitter.com/R3i75fFNOE
— Shahrzad Rafati (@shahrzadrafati) March 31, 2020
Once you have this foundation, Rafati said startups can go one step further and vet vendors for values alignment. She said that outside vendors, particularly recruiting companies that help you scale your team, can make or break quadruple bottom-line goals. With that in mind, always verify that outside vendors are aware of your quadruple bottom-line goals and are willing to play their part in supporting you as a client.
Ethical business is good for business
When the subject turned to COVID-19 recovery, Rafati said that companies should consider a quadruple bottom line as a key tactic for them to survive and thrive post-pandemic.
“We’ve been looking at this as an ethical decision, but it’s actually a smart business decision,” said Rafati.
Rafati cited McKinsey and Company research that found diverse companies are up to 35 percent more likely to outperform their peers. To Rafati, this makes perfect sense; she said that her experience building BBTV definitively showed that more diverse teams were more creative and able to come up with solutions the market valued. Further, as top talent increasingly demands their employer to have stated values and support communities outside of the organization, Rafati said building a quadruple bottom-line business makes it easier to hire and retain smart people. And attracting brilliant people who want to stick around is part of a high-performing organization.
Speaking to male founders specifically, Rafati added that this isn’t about women versus men, but instead building a great company with diverse voices, which requires men to support removing barriers that women face in the hiring, promotion, and business-building process.
“You need to eradicate the idea that it’s only up to women to solve the problem,” said Rafati, adding that men – particularly male founders – are in positions of power and thus can be helpful in this cause.
Founders need to hold themselves accountable
The adage of “what gets measured, gets managed” applies to all business outcomes, not just financial. Rafati was clear that any founder seeking to make an impact must have the “willingness and desire” to hold themselves and managers accountable to progress against all bottom-line goals. She also recommended that leaders start as soon as possible, since it’s actually easier to embed habits when the company is smaller.
“The sooner you implement it, the easier it is,” said Rafati.