Ask HN: For-profit, non-profit, or some kinda hybrid?

12 points by davidryal 15 years ago | 4 comments

Important Media (.org) is another entry in the "innovative models for breakeven+ creation of good online content" spaghetti-against-the-wall contest.

Currently, it's organized as an L3C -- the "low-profit limited liability company" is on the books in ~10 states, and is defined by putting 501c3-like social mission into an LLC charter ahead of profit. What this means is that it's basically organized as close as our legal system allows to a hybrid right now, and retains the optionality to take either path for as long as it's kept this way.

Background: A long time ago in a part of the bay area far far away, I started a niche blog network about environmental issues called Green Options Media. After a while, it was acquired by a social entrepreneurship incubator called Virgance, and then mostly spun back out to me earlier this year. I've nursed its 11 sites mostly back to health from disrepair, while implementing what I believe to be sustainable, scalable structures for organic growth.

Over the last few months of re-bootstrapping, I've confirmed my most important hypotheses, hit breakeven, and am ready to look at raising money to scale more quickly.

The million dollar question: is an altruistic content play (i.e. the bastard child of ProPublica and teh Cheezburger network) better served, both for short-term purposes of fundraising and for the long-term, by the for-profit or non-profit world?

I wouldn't ask here if I thought there was one clear right answer, but I've always been rabidly pro-entrepreneurship since I saw firsthand the ineffectiveness and utter lack of financial independence of environmental nonprofits in DC.

There are many, many angles to consider and I would love to take the conversation offsite to any other venue if it's more useful, but I couldn't think of a better place to get the conversation started than HN. I'm not much of a hacker myself, but I'm a firm believer in the wisdom of hacker culture. So, discuss?

pringle 15 years ago |

While I think this is a fine question for discussion on HN, you have to understand that 99% of HN users are clearly going to recommend the for profit route. HN is all about startup culture -- building, iterating, and constantly exposing yourself to market forces to see what works. It's the basic principle that everyone here lives and works by.

I happen to share that opinion, but perhaps my opinion might have added value because I've spent years in the DC nonprofit world you mentioned. And I can say from experience that the non profit structure as it is conceived by most organizations today is detrimental to innovation and success. Non profit advocacy is broken. This is obviously a huge topic, but I will quickly just comment on your specific situation.

Your startup is a content play, right? Never mind the subject matter. Sure, it's about do-gooder environmental stuff, but at the end of the day, you have to play by the same rules as all other content providers. Whether you like it or not, you are competing with HuffPo, TMZ, I Can Haz Cheezburger, etc etc. You are competing for people's attention. Going the non profit route just seems like a way to fool yourself into thinking you are insulated from market forces, when there's truly no insulating yourself from them. So why fool yourself. Expose yourself to the market, it will make you better and will give you a clearer and quicker picture of what works and what doesn't. The idea that things that make the world a better place shouldn't have to play by the same rules is BS. That's just a good way for an organization to die a slow, clueless death.

My two cents. But this is HN, so what did you expect? :)

myoung8 15 years ago |

You'll have a tough time raising money from traditional angels/VCs if it's not a C-Corp.

I've heard of a couple VCs out there who want to invest in social entrepreneurship, though, so maybe you want to ask them. Check out Good Capital: http://www.goodcap.net/

davidryal 15 years ago | |

I should have covered this. Choosing the for-profit road would, indeed, meaning converting to a C-corp. Luckily, that's not too hard to do without adding much marginal cost on top of the legal costs of closing a round.

davidryal 15 years ago |

wow, i'm surprised by the lack of response here. is HN the type of place where you need to get a bunch of people to vote up your link before anyone notices?