happiness
capitalism
Alain de Botton

Building A Better Version Of Capitalism Is A Massive Startup Opportunity

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Why, on a philosophical level, has Facebook been so staggeringly successful? A startup that swelled into a multi billion dollar revenue generating business in a relatively short span of years, one which continues to attract billions of users every month?

According to writer and philosopher Alain de Botton the company’s success can be explained by the fact it tapped into a genuine human need that was being overlooked and underserved by the rest of the business community: the desire to have better relationships.

Whether Facebook is actually serving that need well is a whole other question, but the appetite it taps into is undeniable. And de Botton argues that other core human needs continue to be drastically underserved by the modern business community — providing a fertile opportunity for startups to fashion and forge businesses that are successful exactly because they serve the goal of increasing our wellbeing.

He was making the comments in a talk on the virtues of modern business last week, at London’s Midtown Big Ideas Exchange — beginning with the premise that we need a better, more virtuous version of capitalism. Not that capitalism itself is broken, with de Botton professing himself a capitalist with caveats, but that the current version is misguided and misdirected — with businesses all too often created to fix problems that are, as he put it, “nonsense” or “bullshit”. Rather than addressing areas of genuine human psychological need.

No one in a developed economy can argue that selling bullshit is going to increase the sum total of human happiness. Not even in a mercenary sense — because, as de Botton pointed out, after a certain income threshold, rising wealth is not a psychological accelerator to happiness.

“How are we going to go about creating a better version of business — a better version of capitalism?” he began, dubbing this “one of the most pressing issues of our time” given its contribution to social unrest and human unhappiness. “Capitalism has taken a real bashing over the last few years, is in deep trouble as a concept, assailed from all sides. Where we’re aiming to get to is a good version of business, a good better version of capitalism.

“We’ve got to try and make headway because if we don’t make headway the mob will. We live in a world that’s dominated by social media. By instantaneous, mob, collective reactions to things and unless businesses, and people involved in business understand a little bit more about what they’re doing, and what they should be doing, and what they should be defending, and what they should be changing the system will be in trouble.”

(Entrepreneur Nick Hanauer expressed similar sentiments about the need to address capitalism’s rising inequalities in a recent article for Politico, called The Pitchforks Are Coming… For Us Plutocrats.)

“Many economists have noted in the past few years ever since Richard Layard’s landmark studies on happiness, we have recognized that increases in happiness do not directly follow from increases in national income. That a country can get ever richer and people are not happier. The magic figure is $36,000, above $36,000 increases in income do not translate very easily into any increases in happiness,” he added.

de Botton went on to define human need as the core things that are elemental to our psychological wellbeing. And which are absolutely distinct from “vain desires” — aka passing fancies or things we wish for “in an idle way”. Things which we are all too often induced to wish for by the snake oil of the advertising industry.

“More of the economy needs to further up Maslow’s pyramid.

Hence the misdirection of much of modern capitalism — since it’s pouring its energies into coming up with ever more clever ways to sell us things we don’t need, rather than applying intellect to figure out what we really need and selling us that instead.

“I think it is an absolutely fundamental basic philosophical distinction — that distinction between needs and desires. So needs are the things you really need, and desires are the things you think you need but in fact you don’t really, you only wish for them in an idle way,” said de Botton.

He referred to the ancient Greek philosopher Epicurus, saying his recipe for human happiness amounted to an individual being able to gain three core things: community/friendship, the chance to be independent, and the chance to think continuously about an inner life in order to reduce personal anxiety.

“Those who oppose business, those who say businesses corrupt, they latch onto something absolutely key. They will say that businesses are not satisfying our real needs, they are merely exciting us to vain desires. We don’t really need to go gambling, we don’t really need to go bowling, we don’t really need to eat greasy, unhealthy food, but we can be excited to do so with certain inducements and therefore business is evil; business it not virtuous because it is not properly satisfying people’s needs,” he said.

“And because this is undoubtedly true that some organizations are satisfying vain needs and not real needs, this has cast a cloud over all business and it’s slightly muddled the perception of everyone working within capitalism.”

But — crucially — it does not have to be this way, argued de Botton. And Facebook’s success in building a business that at least started out trying to address a real human need shows the huge untapped potential for startups that opt to “run a virtuous business” by seeking to fix genuine human problems.

What then is the recipe for following in Facebook’s footsteps and building a business along de Botton’s more virtuous, capitalist lines?

“You just have to start with human need. What is it that really makes people happy?” he said, adding that an area of particular interest for him is relationships. “How we relate to others. The single greatest contributor to people’s wellbeing is what sort of relationships are they in. And we are hopeless at relationships.”

He cited statistics that half of marriages fail, and that not only that but of the half of couples that stay together 40 per cent have thought of leaving their partner more than one in the previous month. “We need to think about this area. It should be a major area of the economy. It should be a bigger area of the economy than running shoes,” argued de Botton.

“Think of Maslow’s famous pyramid of needs, at the bottom you’ve got material needs, as you climb up towards self actualization, meaning, friendship, connection etc. I would simply say that more of the economy needs to further up Maslow’s pyramid. I think that’s happening anyway — the fact that Facebook’s now one of the most important companies in the world. I don’t think it’s doing it that well, but it’s further up the tree than an oil company. It’s further up the pyramid of needs.

“And I think this is going to be the direction as neuroscience makes advances, as we enter into a more psychological century, and as we realize that we’re still only at the beginning of capitalism. It looks like we’ve got everything. It looks like Apple’s invented every gadget but there’s so much that still needs to be done, the economy still has so much to grow for.”

One area de Botton singled out as ripe for far more better businesses to be created is matching human talents to jobs. A mismatch in our skills and careers is the cause of much modern misery, he argued, saying far more innovation is needed here.

“Most of us are still trapped in the cage that was chosen for us by our 17-year-old selves and we can’t get out of it because we are still at the dawn of really trying to understand how to match people with jobs which properly fit their talents,” he said. “One resource we waste inordinate amounts of all the time is human talent. We are still not matching talent properly.”

Talking generally about opportunities that entrepreneurs can capitalize on within a more virtuous model of capitalism, de Botton suggested even something as basic as making a list of things that make you unhappy could offer the germ of a business idea.

“There is a back to basics view that suggests that capitalism is sort of running out of steam because we’ve got everything that we need… I think that’s completely wrong. The world economy will only, as it were, have done its job when everything is perfect. So long as you walk down the road and one paving stone is slightly misaligned, so long as you’re look at a building and one tile is a little bit out of place, so long as there’s something you want and no one is quite selling it to you, so long as there’s an area of your life that’s a little bit unhappy and someone is not selling you a service to fix it the economy is not large enough, there is still unemployment that has no proper basis.

“In other words there is a lot of need out there that is not yet being satisfied. I think we should and can have full employment if we focus on allocating our resources properly.”

Unemployment is a consequence of “the wrong perception of what should be commercialized”, he argued, adding: “We haven’t begun to scratch the surface of human unhappiness. Every bit of human unhappiness is a business waiting to be born. Some people say what business should I do, what business should I go into? And I always say are you unhappy about anything in your life? Make a list of everything you’re unhappy about — from the moment you wake up to the moment you go to sleep, in an average day.  Everything you write down is a business.

“There are so many needs which we haven’t yet learned to satisfy and a full economy will be one which properly delivers happiness across so many areas. At the moment we are just scratching the surface. We have managed to satisfy people’s basic material needs… but we’re unhappy, we’re squabbling, we’re looking for meaning. These are all businesses waiting to be born. Waiting for the ingenuity of entrepreneurs to harness human unhappiness and connect it up to profit.

“It’s only been done in a relatively narrow range of human activities. Running shoes, got lots of those. Pizzas, got lots of those. One of the largest businesses in the world should be psychotherapy. Given the contribution that psychotherapy can make it should be worth a hundred times more than BMW,” he added.

Until Facebook came along we didn’t know how lonely we were.

And while de Botton conceded it may be “on the whole a little bit harder to make money from genuine needs than vain desires”, he argued the potential rewards are worth the extra effort — given the contribution more virtuous businesses can make to those who build them and the people the businesses serve. And given the risks associated with doing nothing to fix the model of capitalism we have now.

“Until Facebook came along we didn’t know how lonely we were. Or how much we wanted to connect with other people. We didn’t even know it was a need, we didn’t know it was a business. That need to send people messages all the time about more or less nothing — we didn’t know that was a need. That’s what businesses do, they latch on to our needs and there is an enormous area of opportunity waiting to be discovered.”

In the talk de Botton also discussed philosopher and economist Adam Smith’s idea of the need to incentivize the very wealthy — the richest entrepreneurs who have already amassed their fortunes — to make more socially beneficial contributions. The problem, he argued, boils down to society using the shorthand of wealth to “keep score” on individual worth, which encourages the super rich to amass more wealth instead of looking for ways to use that wealth to help society at large.

“We don’t honor people who do the right thing enough… The incentive structure is not there. There’s occasional reward but there is no reliable system of reward pegged to doing good in the world. And that’s why more people don’t do good. Because it’s literally irrational,” argued de Botton. “We need to understand human vanity. We need to understand the mechanisms by which love, respect, honor can be aligned with socially beneficial goals. It absolutely isn’t at the moment.”

“We’ve got a very dangerous value system which rewards things it shouldn’t be rewarding,” he added. “But the useful thing is the rich don’t want money they want love. Therefore a good society takes that and does very interesting things with it.”

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