What Nonprofits and Successful Startups Have in Common

Mon, 04/28/2008 - 11:34am — Anonymous

What’s the difference between the world’s second most popular Web site and nonprofits? According to Paul Graham, a co-founder of the venture capital company Y Combinator, not as much as you’d think. In a recent essay, Graham writes that in Google’s first year, it was indistinguishable from a nonprofit. When startups initially focus more on making what people want rather than making money, he charges, they’re more likely to achieve success. And when startups see themselves as benevolent, their founders are motivated to work harder because they feel they’re helping people.

Graham cites Craigslist as “astoundingly successful,” even though “it's not a charity, but they run it like one.” He goes on to explain that Microsoft, which at one point was the largest company in the world (it’s still the largest software company), in its beginnings acted like an early Google by creating a standard for PC manufacturers to follow, thus making computers cheaper and more accessible. And though he doesn’t mention it in his essay, the increasingly popular Web browser Firefox is sponsored by the Mozilla Foundation, a nonprofit organization.

Ultimately, Graham’s point is that startups have a lot to learn from nonprofits. His feeling is that “if you start from successful startups, you find they often behaved like nonprofits. And if you start from ideas for nonprofits, you find they'd often make good startups.”

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