Bad for Business. Good for Humanity

I typically come across two types of companies, one where I go “that’s a smart business, you should keep doing that” and another where I go “that’s not a smart business, why the hell do you do this?”. Now there’s a third type of company that I come across much less frequently that I go “that’s a dumb business, but you should keep doing that”. There are very few companies in the third category but they are folks like SpaceX, AstroForge and Boom Supersonic.

Most businesses are created to be a benefit to business, to make life easier and to generate returns for the investors that took the risk. There are many examples from WalMart to Amazon to Airbnb and Facebook. But these businesses are still relatively “safe” bets compared to the stuff that the three companies I mentioned earlier are doing. AstroForge may one day become the “Amazon of Space Rocks” but the path to profitability for them is going to be a decade plus out even if they make it that far. The same goes for Boom, who are now only doing flight testing of their research plane, they haven’t even started on the commercial planes yet.

But while these businesses might be burning money from a purely business perspective, I think they are doing something far more important: driving humanity forward. What AstroForge is doing for example might be a bad business from the perspective of getting revenue and profits in the door, but what they are doing in the end will be a massive net benefit to society as we will (hopefully) figure out how to mine space rocks instead of digging up our backyard for those same minerals. Same thing goes for SpaceX and Boom Supersonic, while SpaceX has managed to turn a tidy profit, their existence would still be essential to society even if they constantly lost money.

While we are used to the idea that a business must turn a profit, I think we need to carve out exceptions for companies that drive innovation and help us as a species take another leap forward. In the end what these companies will produce will be far more valuable than the returns they generate for investors.