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Mohamed Mohamoud

Author and the owner of idman news

March 5, 2021

Idman news

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This California investor predicts a 10-year ‘good economy’ revolution that shoves the sharing economy aside


Joe Sanberg has big plans for the economy, and maybe himself.

The tech entrepreneur and investors wants to lead a tech revolution as a corporate White Knight, and possibly throw in a run for the White House. But his foremost goal is to lead the “good economy,” a movement quickly gaining name recognition and the attention of big business amid intense interest in environmental, social and governance (ESG) investing and consumer habits.

“I believe we serve where we are needed.  I’m always considering the ways I can help those in need — including running for office.  If I ever conclude that’s where I’m needed to serve, then I wouldn’t hesitate,” says Sanberg, 41, co-founder of financial services startup Aspiration.com, and a public policy advocate for labor, corporate responsibility and climate initiatives in California. In 2019, he entertained a run as a presidential candidate declaring a war on poverty and homelessness, and still harbors political dreams for 2024.

“The next 10 years of tech-driven innovation will be about the creation of the ‘good economy’ — like the past 10 years were about the sharing economy,” Sanberg told MarketWatch. “The good economy is not just about conscience, but consumers are demanding it.”

A prime example — Sanberg calls it an “anchor” of the movement — is Aspiration, backed by venture capital funds and the likes of actors Leonardo DiCaprio and Robert Downey Jr. The latter’s Footprint Coalition Ventures was part of a $50 million investment round on Jan. 27 that raised Aspiration’s total investments to more than $250 million.

“The work [Aspiration is] doing is critically important,” says Mark Wexler, co-founder and managing partner of Just Business, an impact-investment firm. “It’s important to know that your money is not destructing the environment. This is the big play that major companies can make in how they invest and in helping people.”

The Los Angeles–based company, which deems itself a platform for automated ESG impact services for individuals and organizations, features a “Plant Your Change” service that rounds up debit-card purchases to the nearest dollar and uses the change to plant trees. To date, Aspiration has planted more than 5 million trees. 

“Aspiration will be to the ‘20s what Airbnb
ABNB,
-4.08%

and Tesla
TSLA,
-1.82%

were to the teens,” in terms of influence on the confluence of tech, politics and society, Sanberg says.


‘Aspiration will be to the ‘20s what Airbnb and Tesla were to the teens.’


— Joe Sanberg, Aspiration

Sanberg, an ex-Wall Street executive and investor who has been vocal about corporate responsibility for years, was a lead investor in Blue Apron Holdings Inc.
APRN,
-7.68%
,
the largest fresh meal-kit company in the U.S., and IVY, a leading social university. He also serves on the board of the Sierra Club Foundation and the Jefferson Awards Foundation, which involves more than 1 million young people in volunteerism and public service each year.

Sanberg’s political beliefs and his startup are intertwined in what has been a popular — or essential, the more cynical might argue — pivot by businesses to be more socially active.

Though its origin stretches back years, the good economy movement is growing into as much a necessity for a company’s business plan as 401K plans and lobbying efforts. General Motors Co.
GM,
-1.54%

and Ford Motor Co.
F,
-0.73%
,
for instance, have vowed to commit fully to electric vehicles by 2035. International Business Machines Corp.
IBM,
+0.13%

last week said it plans to reach net-zero greenhouse-gas emissions by 2030. Companies that have defined themselves by larger goals beyond their business have flourished, like Beyond Meat Inc.
BYND,
-0.87%
,
which has seen shares gain 50% over the past 12 months as it pushes to get meat-eaters to opt for a more environmentally-friendly diet.

For these companies, recent consumer surveys underscore the importance of brand trust, which ranked as one of the five most important criteria for consumers, at 81%, according to an Edelman survey released last year. When asked if they chose, switched, avoided or boycotted a brand “based on its stand on societal issues,” 64% said yes in 2019, compared with 51% in 2017.

About three-quarters of U.S. adults consider reducing their environmental impact as “either a major or minor influence on both their personal behaviors,” a Morning Consult poll in late January found.

The broader investment world is getting on board, too. MSCI, one of the leading providers of indexes for the financial markets, is seeing demand for ESG ratings and index products outstripping growth in its traditional stock index business.

“We’re giving people a way to match up their money and their morals,” Aspiration Chief Executive Andrei Cherny told MarketWatch. “What we’ve seen amid COVID is people switching to plant-based meat, and being more attuned to the environment. Consumers are thinking more about their values than they have previously.”

To that end, Aspiration says it is working with several unnamed companies, including a real-estate firm in Southern California, on good-economy partnerships.

An e-book from early 2016 called “The Good Economy” imagined such an evolving economic system, circa 2020-’40, with “new approaches to production, work, organization, governance, and eventually politics.

“We also believe, but haven’t argued explicitly, that ‘you can’t get one without the other.’”

“It’s not wise to develop an economic system in which individuals are left out in the cold,” says Bo Cutter, who co-authored the book and is a senior fellow and director of the Next American Economy Project at the Roosevelt Institute. “What was very likely to emerge were different kinds of companies that benefited all workers — and by that I meant anyone who works.”

Such companies, called B Corporations, meet the highest standards of verified social and environmental performance, public transparency and legal accountability to balance profit and purpose, Cutter added.

One of the first companies to adopt a corporate-responsibility stance was consumer-goods giant Unilever
UL,
+2.02%
.
It developed a sustainability living plan, and has eventually aligned its brand beyond baby food and soft drinks to include good works to improve human rights, climate change, health and hygiene, nutrition, and aid to small farmers.

Read: Microsoft, Unilever and a Finnish oil refiner believe Amazon has it right with climate pledge

When Salesforce.com Inc.
CRM,
-2.15%

introduced a Pledge 1% philanthropy model nearly two decades ago, it was considered a curiosity. Now, more than 12,000 companies have adopted it, including Box Inc.
BOX,
+9.31%
,
Yelp Inc.
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+1.49%
,
Okta Inc.
OKTA,
-1.72%

and Twilio Inc.
TWLO,
+0.63%
.

“It’s been great to see for-profit companies generate social change. This will be the decade of ecopreneurs,” Suzanne DiBianca, chief impact officer at Salesforce, a pioneer in the field of what she calls “stakeholder capitalism.”


‘It’s been great to see for-profit companies generate social change. This will be the decade of ecopreneurs.’


— Suzanne DiBianca, Salesforce

“We are seeing a new wave of citizen social-change agents,” she said.

A plethora of companies have followed the path, including digital banks in the past few years.

“The idea of profit and purpose are not mutually exclusive. A lot has changed from the days of [economist] Milton Friedman and ‘the business of business is profits,’” Scott Beaudoin, executive vice president of social purpose and sustainability at Broder Partners, told MarketWatch.

“The ESG movement really got its roots in Europe, and flourished there much more quickly and deeply than in the U.S., but it is coming here,” Brian Graham, a partner and co-founder of the Klaros Group, an investment and advisory business focused on fintech and traditional banking, told MarketWatch. “Aspiration is well positioned to capitalize on it, and to drive it forward.”

With the greater mainstream adoption of ESG comes tougher scrutiny. “Greenwashing,” in which companies leverage their socially-aware service or product changes to take advantage of consumer trends but then aren’t transparent about implementation and effectiveness after the fact, remains a roadblock for the movement. Traditional banks and money managers, for instance, have faced backlash for making pledges to reduce their carbon footprint and promote ESG generally, but still finance climate-change violators to round out profit-making goals.

Community development financial institutions (CDFIs) — private financial institutions dedicated to delivering affordable lending to underserved communities — have created one strong ripple in the good economy wave. Among them: Oportun, a lender that aids Latino communities; Commerce Home Mortgage, which focuses on providing access to home ownership for Latinos in Southern California; and Change, which provides mortgage loans to underserved communities.

“You can do good [financially] by doing good,” says Steven Sugarman, who founded Change in 2017. The company offered $7 billion in home-ownership loans for lower-income individuals, Blacks and Latinos last year, and expects to lend $12 billion in 2021.

“When there are non-economic factors limiting supply of services to a market, that’s a market you want to serve,” said Sugarman, who estimates the market at about $200 billion. “We did this not just for social reasons, but it’s a good business.”

Ultimately, the intersection of mission-based businesses and good business — especially in politically and socially charged times marked by heightened awareness around Black Lives Matter, climate change and immigration — is inescapable, argues Aspiration’s Cherny.

“The good economy is about building trust,” Cherny says. “And part of the equation is distrust of Big Tech and some financial services.”



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