Great Exploitations

I knew it was too good to be true.

That's what I thought last week as I drafted a fourth email to "info@btsa.us"—the only form of contact listed on Behind The Scenes Apparel's (BTSA) website. My three previous messages about placing a bulk order had gone unanswered, and I was starting to panic.

BTSA was supposed to be the main supplier for Not For Profit Apparel (NFPA)—a wholesale purchasing business I started to buy luxury, USA-made basics directly from manufacturers and sell them to customers with minimal markup. If I couldn’t get this order in, things were going to get messy.

The way NFPA works is by taking pre-orders from our customers and pooling all those orders into bulk purchases with manufacturers. So if we couldn’t fulfill these shirt orders, we’d have to refund those pre-orders—and pay the refund fees ourselves.

[!NOTE]
I’d love to avoid this situation in the future by waiting until after we’ve drafted the PO with manufacturers to charge credit cards and confirm orders, but I’m not sure how to set something like that up.

If anyone reading this is a Shopify wizard, send me a message.

There was, however, another solution. Our other supplier, US Standard Apparel (USSA), makes a near-equivalent shirt to BTSA’s. So I could just fulfill the orders with shirts from USSA.

The only problem: the USSA shirts cost ~$2 less per shirt.

Yes, I said less, not more. And I know most of you are probably scratching your heads wondering, “Why is that a problem? Doesn’t that increase your margin on the shirts? Isn’t that a good thing?”

And if we were running a typical business, yes, this would be great. But NFPA’s goal is to limit profits and pass those savings on to our customers. It’s right there in the name: Not For Profit Apparel.

So even though the situation was unforeseen; even though we’d still deliver a high-quality product; even though the overcharge per order would be small; and even though our customers wouldn’t know unless I told them, I felt extremely conflicted about switching the shirts and pocketing the profit.

And in classic me fashion, all this worry turned out to be unnecessary. BTSA eventually responded, I put in a purchase order, and the shirts arrived without issue.

But as I decompressed from the experience, I began pondering a question that has plagued me my entire life as an entrepreneur...

Why am I so reluctant to make money?

There were a lot of reasons Lumastic—the startup I ran for four years—eventually failed. But chief among them was my reluctance to ask anyone to pay for our product. I gave away perpetually free, “early adopter” licenses like candy on Halloween.

Before that, as a freelance videographer and motion graphics artist, I did tons of work for free. Freelancers often do pro-bono jobs when starting out to build a portfolio, but that’s not what I’m talking about.

I literally had clients who signed contracts to pay me thousands of dollars, but when it came time to send an invoice, I’d dramatically reduce—or completely zero out—the total they owed.

Why did I do this?

I believe much of this behavior stems from how I want to be perceived. I want to be liked. I fear disappointing people. I don’t want to be seen as greedy. I want to be seen as a good person.

Logically, I know making a profit doesn’t make you a bad person. But my gut seems to believe that profiteering is not a safe activity for someone trying to be seen as good.

And in today’s political, social, and economic climate, I think my gut may have a point.

“Profit is theft”

We’re living in a time of extreme income inequality not seen in the United States since the 1920s. Wages are stagnant. Education is expensive. Healthcare costs are crippling. The rent is too damn high.

Meanwhile, the stock market is soaring. University endowments are growing. Pharmaceutical companies are expanding. Private equity firms are buying up real estate.

Since the pandemic, we’ve also seen high rates of inflation and rising prices on everything from plywood to diapers. There are many complex causes for inflation—including supply chain issues and rising interest rates. But a recent study found that companies used inflation to artificially raise prices and increase profits. This practice has earned a name: greedflation.

In every domain of life, the rich and powerful are gouging people in the pursuit of profit. This dehumanizing exploitation has people justifiably angry at corporations, CEOs, and capitalism itself.

When Brian Thompson—the CEO of UnitedHealthcare—was murdered last week, the dominant sentiment online was “good riddance.”

The inescapable truth is that our economy is structured around exploitation; and that exploitation has fueled political extremism so severe that people are literally being murdered in the street.

In this context, my ethical quandary over charging two extra dollars for a t-shirt feels inconsequential. But I also feel like it represents the fundamental question at the heart of this story...

Does building a profitable business make me a bad person?

I believe profit is the product of exploitation. I believe the profit-driven motives of companies often lead to unethical and immoral behavior. But I don’t believe that all profitable companies—or the people who lead them—are unethical or immoral.

If profit is theft, then I believe in honor among thieves.

Last week, we talked about Newman’s Own—the wildly profitable food company that gives 100% of its profits to charity. Over 40 years, Paul Newman and A.E. Hotchner’s “shameless exploit” has generated over $600 million in donations.

Their model inspired Hank and John Green to launch Good.store, a subscription-based company selling staples like coffee, soap, and socks. Since 2019, it’s generated over $8 million in profits—all donated to Partners in Health, an organization fighting for healthcare equity.

Make no mistake: Good.store is an exploit. They charge customers more than it costs to produce their products. They pay employees less than the value they generate.

But no one would argue that this exploit is unethical—or that the Green brothers are bad people for building it.

In fact, I think Good.store is...well...good.

Donating their profits to charity doesn't make these companies incapable of doing harm. And the fact that these companies exist doesn't negate the critiques and consequences of late-stage capitalism.

But I think companies like Newman's Own and Good.store help me see that building a profitable business doesn't make someone – including myself – a good or bad person.

Profit is simply power. And as entrepreneurs, it’s what we choose to do with that power that defines our character and legacy.

In a recent episode of my podcast, Just Business, I said: “Starting a business is an act of political protest.”

Especially in these dark times, entrepreneurs have a chance to leverage business to organize, promote, and fight for a more just economy and society.

For me, I’ll keep exploring ways to practice what I preach. If you’d like to join me or follow along, subscribe to my newsletter below.

I’d love to know your thoughts on this topic. What resonated? Where am I wrong? Leave a comment below.

Until next time,
Drew