Positive-, zero- and negative-sum companies
Before you decide to work with a company, or start one, you should think about whether it’s positive-sum, zero-sum, or negative-sum.
Positive-sum means that the company adds value to society. Paul Graham says that if you have some wood and you make a table out of it, you can sell it for more money than the wood costs, and thus make money. You’re not just taking wealth from someone; you’re creating wealth. You’re making society as a whole better off. These are the best kind of companies to work with. For example, a bootcamp that finds high-potential but poor students and gives them first-rate education in exchange for a percentage of their salary.
Zero-sum means that the company is just transferring wealth from one party to another, not making society as a whole better. For example, someone approached me about a product that helps hospitals band together to negotiate discounts from suppliers. Well, if the hospital saves 10 lakh rupees, the supplier has made 10 lakh rupees less, so this company is zero-sum. It neither helps nor hurts society.
Negative-sum means that the company is hurting society as a whole. For example, I was talking to a couple of founders about their startup, which buys and sells people’s personal information without their consent. Obviously, we shouldn’t be part of the problem. As Marco Arment put it eloquently:
Like selling extended warranties that don’t really cover what buyers think they cover, or being a tremendous patent troll like Nathan Myhrvold, there will always be ways to make money that are a net drain on the world — that take from society rather than give to it. I couldn’t sleep at night if I made my living like that.
Before you decide to work with a company, identify which category they fall into. If I were deciding to work full-time with a company, I’d work only with positive-sum companies. As a consultant, I’m okay with zero-sum companies, too. Of course, there’s an element of subjectivity here, which is why you should apply your judgment.