Let’s take a short literary detour. If you read my recent article “13 Books That Changed My Life (And Every Founder Should Read)” you know that Ayn Rand’s divisive novel “Atlas Shrugged,” has had a profound impact on my life. I’m not alone – just ask Alan Greenspan, Mark Cuban, and John P. Mackey (CEO, Whole Foods). TLDR: Rand uses her character, John Galt, to argue that rational self-interest is in the best interest of the whole. In other words, by seeking personal gain, individuals improve the world and serve their communities. It may sound counterintuitive, but it applies both to our professional lives and the unique opportunity of angel investing. Here’s how.
3 Ways Rational Self-Interest Serves The Whole
1. It Leads to the Development of Better Products and Services.
You don’t need me to tell you that founders don’t get up every day to run a business out of the goodness of their hearts, right? They do it primarily for their self-interest: to feed their families, to pay their mortgage, to feed their entrepreneurial spirit.
Here’s the catch: their products and services have to be good to keep funding their self-interested goals. The better the products and services, the more successful they are and the more they can achieve; their self-interest drives them to provide high-quality products and services for consumers and motivates economic activity.
2. It’s Self-Regulating.
What’s the first thing that happens when you take those excellent, high-performing products and services and bring them out into the marketplace? They self-select their price range. This means that by wanting to stay competitive and still offer the experience necessary to drive success, these businesses can’t be participating in predatory practices like price-gouging. Instead, they structure their pricing at that optimal point where they’re able to offer their products and services at both the quality and the cost that consumers demand.
3. It Doesn’t Breed Greed.
It breeds philanthropy. Stick with me here. Self-interest can and should include charitable and philanthropic activity because creating strong and vibrant communities supports our business efforts. Just the way we donate money and volunteer to support organizations we believe in, business owners support community growth and development like pedestrian crossings and local youth programs to ensure the local area they operate in is safe and accessible.
4. It’s Not About Being Selfish
These terms can be easily confused, but they are very different. Rational self-interest is based on mutual respect whereas selfishness is exclusively about the self succeeding (even at the expense of others). Unlike rational self-interest, selfish behavior is detrimental both to the self and to others.
Consider the many ways businesses work to provide a comfortable, inclusive environment for you. Maybe they place water bowls outside so as not to discourage pet owners from visiting. During this pandemic, they’ve brought products curbside, taken orders over the phone, and provided free delivery.
Yes, these actions are motivated by self-interest, the desire to continue to sell their products and services to you, but do they not also serve our community as a whole?
When We All Win, We All Win.
It’s pretty simple: self-interest guides resources to their most valued use. I founded MacDonald Ventures because of my unstoppable desire to win. By funding phenomenons, I’m helping the best and brightest ideas make it to the marketplace where they’ll change our world for the better. If that’s self-interest, count me in. Are you a passionate founder who’s ready to Go Galt? Reach out to my team.
Enjoy the ride.