Welcome!

This is the last video in “What is Business?”.

Congratulations on making it this far.

We’ve covered a lot.

• We started out talking about the fact that we live in a world that’s created by millions of businesses working together

• We also said that each of us has the power to change our relationship w business—and that learning to think like a businessperson was a superpower

• We then looked at all of various ways that we could categorize businesses:

--By their size, and specifically the number of employees

--Or by their sector and industry using the NAICS code

--And finally by their legal structure whether they were incorporated and unincorporated

• And moved on to understand how businesses actually work

--Starting with their business model using the Business Model Canvas

--We then looked at how businesses create and keep a paying customers

--And spent time understanding the value those customers receive from the products and services they buy

--Finally we learned about the 3 main financial statements used to measure Money and Time

--And we went deeper on the income statement or P+L to understand how companies measure profit and losses

But as we wrap up this course on the fundamentals, there’s one last thing that we haven’t discussed.

We’ve talked about What Business is and How businesses work, but we haven’t said anything about Why Business is.

We’ve said nothing about the purpose of business

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Why is business?

At first, that might seem like the most obvious question in the world…

The purpose of a business of course is to make money.

Obviously, right?

Capitalism is all about making money…isn’t it?

But it’s a question that’s more complicated than it first appears.

To answer it, we need to have a quick history lesson.

Back in 1970, one of the most influential economists of all time, Milton Friedman, published an essay in the New York Times that had a major impact on how businesses, and our entire economy, worked.

Remember, this was right after the 1960s.

It was time of tremendous social change and upheaval.

Business managers were under a lot of pressure to address these changes.

And to show that they were making a positive impact.

But Friedman thought that they shouldn’t cave to the pressure…

In what became known as “The Friedman Doctrine” he argued that

“There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits …without deception or fraud".

And for the next several decades, businesses would stick to Friedman’s plan.

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But then in 2019, almost 50 years after the Friedman Doctrine, a group of 181 CEOs—from some of the world’s biggest and most influential businesses—signed a letter challenging the idea that businesses’ only purpose was to deliver profits to shareholders.

Instead they committed to leading their companies for the benefit of all stakeholders —investors but also customers, employees, suppliers, and the communities where they operated.

This letter reignited the debate on why companies exist: is it to return profits to shareholders or to create value for all stakeholders?

Some people said that the CEO letter was a significant milestone.

A turning point…a moment for companies and capitalism to realize their full potential–making a profit while serving a larger purpose.

Others said that it was empty talk.

Basically a symbolic gesture without any real change or consequences.

The debate continues, but maybe it’s somewhat missing the point.

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Remember in one of the first classes in this course, we said that the vast majority of businesses were small?

Almost all businesses have no employees.

Only the owners work in the business.

But it’s not just that they don’t have employees they also don’t have investors—

The owners are the only ones investing money in those businesses.  

And not having investors means that the debate over shareholder vs stakeholder primacy is totally irrelevant to almost all the businesses out there.

I’ve spoken to hundreds of independent entrepreneurs over the years and what I can tell you is that while money might be the prize, it’s rarely the point.

People start their own thing for all kinds of different reasons.

The number one reason is that they want to be their own boss.

They want independence and autonomy.

They want the freedom to make their own decisions.

To call their own shots.  

Money comes next.

But people have different goals and aspirations when it comes to money.

Sure, some want to get rich—to build wealth.

But most simply want to make enough money to support a comfortable life.

And some do it as a side hustle to supplement an income from a job.

For most people money’s a sign the business is working—it’s not the reason it exists.  

People start businesses for the joy that comes with creating something.

They feel pride and a sense of accomplishment.

From building something that matters.

Other people are motivated by the desire to learn new skills or master existing ones.

Business is an opportunity to grow and learn.

People start businesses to have a positive impact on the lives of other people.  

Many people are motivated by the desire to leave a legacy—to build something they can pass on to future generations.

People have all kinds of reasons that they start businesses.

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You can think about business as a tool. And that tool can do many different kinds of jobs.

Really it’s more like a toolkit than a single tool.

And that toolkit is set of building blocks that can be arranged in many different ways to solve many different kinds of problems.

In fact, when combined with human creativity, there are literally infinite possibilities for problem solving.

Which is great news because we have a lot of different kinds of problems that need solving.

And the other great news is that our business toolkit continues to change and evolve.  

Business doesn’t stand still—it adapts to meet changing realities.

People are always adding new ideas and new approaches to the toolkit in order to better meet new goals and solve new problems.

Because the problems that we have are not the same problems as parents or grandparents had.

And they’re not the same problems that people had when Milton Friedman wrote his famous essay 55 years ago.

And that’s what business is all about.

New tools to creatively solve new problems in new ways.

Changing our relationship to business is not only about getting a better understanding of what business is and how it works—it’s about expanding our ideas about why business exists in the first place.

And the kinds of things that businesses can do.

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Congratulations.

You’ve taken the first step by completing this course.

I hope that it’s the beginning of a new relationship to business—one that is filled with creativity, and learning, and prosperity.

We’re created this course because we know how powerful it can be for people to        learn how to think like businesspeople.

As you start to apply these ideas in your own life, my hope is that you start to feel that power for yourself.

And as you do, I have a favor to ask:

Take a few moments to share your own journey with us.  

It’s as simple as sending us an email at hello@indie.biz

Hearing from you is the only way for us to know if this course is working—if it’s doing what we set out for it to do.

You can also let us know what else you want to learn about business—and that will help us as we create more courses like this one.

Thank you for watching—I wish you all the best as you embark on your new adventure in the world of business.

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