Is it possible for tech for good to exist within a for-profit model with Jim Fruchterman

Speaker A: We in tech for good couldn't survive if there wasn't a thriving tech industry inventing the core technologies, building the open source technology. So we depend on it and we need the goodwill from a lot of tech leaders to really maximize our m impact. But I tell people when I go to a tech company and say, I want a free license to your crown jewels, your product, your software, your technology, your intellectual property, they say yes, 80% of the time. And people go those greedy so and so's why. And I'm like, they're immensely proud of the products they've created.

Speaker B: Hello, uh, and welcome to Tech Tomorrow. I'm, um, David Ellerman, chief of software engineering at Zulca. Each episode we tackle a big question to help you make sense of the fast changing world of emerging tech. And today I'm joined by Jim Froxerman, a serial social entrepreneur, podcast host, and author of the book Technology for How Nonprofit Leaders Are Using Software and Data to Solve Our Most Pressing Social Problems. So who better to help me answer the question, Is it possible for tech for good to exist within a for profit model?

Speaker A: I see technology for good or tech for good as centering the good in tech rather than the profit in tech. In other words, that you've made a choice that when things are hard, you're going to choose doing more social good rather than making more money.

Speaker B: So in your 2025 book, Technology for Good, you share the story of founding your first nonprofit. What happened and what did you learn about the limits of traditional for profit tech models?

Speaker A: Well, for me, the fork in the road was a meeting of my venture capital board for my OCR startup. And this time we'd launched a product and we were maybe we're at 15 million a year. And we had a new prototype of the reading machine from the blind. So this had been kind of a secret side project of the marketing team and the engineering team. So we had our big scanner on the table in the boardroom. We take a piece of paper, we run it through it recognizes the words on the page, taking it from image bits into a text file. We send it over to a PC and a first generation voice synthesizer, you know, reads it aloud. You know, these are the times that tribe and solves, but not that natural sounding anyway. But the board was excited, the demo worked. And they said, hey Jim, the demo worked. And they said, so how big's the market? And we said, well, we think it's about $1 million a year. And a very uncomfortable silence ensued. And finally one of my investors said, I'm not seeing the connection to the $25 million that we've collectively invested in this company. And I'm like, oh, it'll be great public relations. Our customers will be proud of us for helping blind people. The engineers love it, my marketing team loves it. It'll be great. It'll break even. And the board went, uh huh, no, they vetoed it on the spot for excellent business reasons, not great social reasons. And that was the place where I had a choice in my career is to Silicon Valley tell you it's a bad idea, you're supposed to stop doing it. And I didn't want to. So I talked to my lawyer who had been kind of cheering me on, you know, from the sidelines, and he said, okay, um, how about I do pro bono legal work for you and we'll start a deliberately nonprofit tech company, a charity. So that's what I did is I, I started a nonprofit on the side, told my wife I would do it part time for a year and then hire an executive director. And that was over 30 years ago.

Speaker B: So that, that sort of journey from your experimentation, discovery of OCR and its applications, and then I guess making that choice between profit and non profit, how did that pan out for you? Because obviously there is a very different model that you have to employ. I mean, profit and capitalism is pretty obvious, isn't it? It's about making money for your shareholders. And then if you get the space and the chance to do other things, then depending on the outlook of the people involved, there may or may not be other things that are achieved. But a, uh, nonprofit normally has a different mission. How did you think about that?

Speaker A: Well, because of my background, I looked at traditional charity and just go, all right, I'm, um, obviously not in that area. So the idea is like, can I take the best things from Silicon Valley tech and apply them to social good? And it turned out I didn't know any charities like this, but my lawyer and I, we kind of cooked up this idea that I was going to sell reading machines for the blind and that was going to be the source of my budget. And it worked. And within three years, we were a $5 million a year break even charity, funded entirely from customer revenue from margin and the irs, our Internal Revenue Service, our, uh, tax authorities were a little confused by this. Like, wait a minute, you're making a profit? No, charities aren't supposed to make a profit. I'm like, well, it's only a little bit of profit and we're tiny, you know, we're 5 million bucks a year and $5 million a year would not have changed m my venture capitalist mind. One wit, one million, five million, ten million. They were all the same. To them, that was failure. But a charity, that's like $5 million a year and breaking even, that's like a barn burner in the charity sector. And so, you know, we treated our blind users as customers. We built a great product. So we were doing the software engineering on their user experience. We had tech support, we had salespeople. Everything that Silicon Valley does, I'm following three or five years behind and just borrowing the business model innovations, the tech innovations to go after the 90% of humanity in the planet that aren't really gonna make you billions of dollars.

Speaker B: I think related to that, I saw a quote of yours that I thought was interesting to explore, and it said, try to do good on pur rather than evil by accident. I'd just love you to expand on that a little bit because it strikes me as though being specific about your product, if it's a digital product, you know, providing a good software engineering experience, all those building blocks that we know work in business are still great foundational blocks for anything. And it just so happens that you can then have a bit more control over what it is you're doing and selling. And that's how it occurred to me your mantra seemed, you know, therefore, if you know your business inside out and you know your product really well, then you know that you're not going to do evil by accident.

Speaker A: Yeah. And, you know, I think that quote is really about the story of a lot of our big Silicon Valley companies. They set out to do good, and then suddenly they tried out something that turned out to be evil. And certainly that that wasn't their original goal, to do evil. And then turns out that evil in some cases pays really well. And so they doubled down on evil. Why? Because money is the central issue. And so I think that if you're going to take investor money and your investors, like most venture capitalists, are really interested in making a lot of money, then you've made your bargain and you're going to follow in this direction. So when I think about companies that don't go that far who are more authentic, it's the B corporations. There's also a big movement amongst the tech industry and tech founders called Pledge 1%, where you give 1% of your equity when you're a startup company to charity, it's not worth anything. And then you go public and suddenly you've got tens of millions of dollars away. Those companies, they're making money, they're doing well, but they've actively set aside something to say, ah, we have social responsibility, we're going to do volunteerism, we're going to be making grants, we're going to give deep discounts to nonprofits. And those companies, to your point, I don't think are doing evil by accident. I think they create real value and they have, I don't know, healthier internal culture than the ones I've observed on. The ones that are completely worshiping the almighty Mammon. Dollar pound euro, whatever it is.

Speaker B: The challenging part of harnessing tech for good is switching focus from profits to other measures of value. And you might reasonably ask whether I've seen a successful example of that in my own career. Honestly, yes, more often than people might expect in nearly 40 years in software, some of the work I found the most rewarding has been with the engineering teams in banking, tv, health care, public services and so on. Nobody on these projects is talking about the share price. They're talking about whether a benefits payment lands on the right day or whether a hospital system stays up so a clinician can do their job. So in my view, what could leaders of for profit tech companies be doing to start edging towards a tech for good model? I think it begins with making impact a first class metric sitting alongside revenue and growth, not necessarily somewhere underneath it. That might mean adopting B Corp's principles, joining pledge 1% or simply giving your engineering teams genuine permission and protected time to work on problems that matter beyond the next quarter. The companies that do this well don't treat doing good as a a marketing exercise. They build it into how they hire, how they measure and how they govern. As Jim says, it's a choice and it's a choice every leader can start making today. Tech for good is all about getting people to think outside of simply making money. Perhaps it's worth asking next whether every type of business can implement this kind of thinking.

Speaker A: You know, I think if you pick any industry, banks are not a bad example. Right. A bank is a software company that happens to dabble in finance, right? I mean, we're talking about like modern business, right? And it turns out, uh, I'll pick a developing country. A lot of the banking industry didn't serve 90% of the populace. Their job was to bank the elite. And so there was a giant market failure gap there. And microcredit and affordable fintech filled those gaps. Those were a whole bunch of opportunities to bank people. A lot of those are businesses. Let's pick climate as an example. Lots of people want to work on climate. A lot of people chose to work in clean energy. You can make boatloads of money in clean energy, right? So you know, for tech for good, as a nonprofit is not a religion for me. You choose the corporate form that like is the most effective in reaching your goals. And if I wanted to do more solar panels or wind energy, I would be a for profit because there's a gigantic market there and you can make a huge difference in the world and make lots and lots of money for yourself and your investors. But then you'll find out that, well, tiny smallholder farmer in rural Africa, oh, they can afford a solar panel. Okay, then I'm done. But pick a different issue. Human rights and civil rights. There is no business model for human rights and civil rights. You care about women's rights, it's like great, but you're not gonna make money off of that. So that's gonna be, have to be in the charity zone.

Speaker B: A couple of examples that I've thought of from the past where um, private and third sector, uh, had worked together on something, so profit and non profit working together for some sort of joint outcome. And I was going to ask you kind of examples of where you think that's worked well. And the examples that came to the back of my mind were where it's probably no more than sponsorship in that the private puts some form of basis in which might be money, might be skills, which equates to people's time, therefore money, it all comes down to the same. So there's a sort of a support model.

Speaker A: I think it's a great model. So let's go back, way back to my OCR company. So at the time, you know, we had taken our 40 or $50,000 product and reduced it to be a $5,000 hardware product that worked with a PC. When I quit, my company's like, oh no, don't compete with us, don't hire away. I said, well great, we'll sign a non compete and a no hire. They gave me a 75% discount on their hardware product. That meant they still made a little bit of profit. I mean they probably marked up that uh, product like 5x over what it cost them to build it. And so 75% discount still had a profit margin in it. And so I became a big customer. And my investors were not against helping blind people. They were against distracting the business away from making money. As long as I was outside and I was a customer, they're like hey, give Jim the giant discount. Give Jim credit. That's actually how I financed the business was on credit for my, my old company. I didn't pay for 60 days. And I told everyone else, I'm a charity, pay upfront for the product. So these kind of dynamics work really well. Um, one of the things that really surprises I think people, because, you know, the tech industry is attracting a lot of negative attention in society right now because of some of our more apocalyptic descriptions of how life as we know it is going to end. Because we've, we're going to create the robot overlords or whatever. But I tell people when I go to a tech company and say, I want big tech company, I want a free license to your crown jewels, your product, your software, your technology, your intellectual property, they say yes, 80% of the time. And people go those greedy so and so's why. And I'm like, they're immensely proud of the products that they've created. Tech people are about craft, about solving problems, and the fact that their product's never going to get to Zambia kind of bums them out. Right? And if I come to them and say, I want to go after a market you've already given up on, um, you know, I want the sleeves off your vest. And they go, oh, sure, why not? And what do I pay them back with? I go tell their teams how their product is helping rural Zambians or kids with disabilities or women's rights activists or whoever it is. I don't have to pay them in money. I pay them in stories of how their product made a difference.

Speaker B: That's really amazing by, ah, taking an existing product suite to a market that the core company are not interested in. I mean, they might say, well, you know, if you're finding that market, then maybe we want part of that. But.

Speaker A: And that can be a problem, Dave. This has been a problem. I'm going to pick Microsoft and Oracle. Microsoft and Oracle both gave their software away for free to the nonprofit sector for many years. And they've both clawed it back because when they're under pressure and they suddenly realize, wait a minute, we give away a market that now looks like it's hundreds of millions or even low billions. We can't afford to give that away. Salesforce created a.org that was a charity and contributed this ability to get Salesforce for free. And they said, I don't, uh, know, whatever it was 10 years later, said it was a bad idea. They had to pay $300 million to buy the charity back into the company. Because when you've given something to charity, you don't get to just take it back. You have to pay cash to some foundation to make up for the fact that you're taking this asset back. And Microsoft used to give really deep discounts to nonprofits. No longer. If you actually prove that there's a business, a, uh, business will come and bring it back. But maybe we bridged a 10 or 20 year gap between when it was clearly not a business and helped a whole bunch of people. And then, you know, the fact that Microsoft is treating it like a business. Okay, most nonprofits can afford it. So, uh, okay,

Speaker B: Tech for good is all about getting people to think outside of simply making money. Perhaps it's worth asking next whether every type of business can implement this kind of thinking. As a software engineer myself, do I agree that tech take teams are, on the whole, proud of the products and happy to offer deep discounts if it means exploring new markets. I'd actually go a little bit further than that. Most of the engineers I know don't get out of bed for the share price. They get out of bed because they've built something they believe is genuinely useful or they've enjoyed building. And when you tell them that thing is now in the hands of a clinician in rural Africa or a teacher in a school that could never have afforded the license otherwise, you can see them stand a little taller. And Jim is absolutely right about that. So what else should for profit tech leaders be thinking about when it comes to helping nonprofits bring their prices down? My honest answer is think in decades, not quarters. Jim's point about Microsoft, Oracle and Salesforce clawing back nonprofit pricing is a cautionary tale here. If you give something away and then withdraw it the moment it looks valuable, you haven't really helped. You've just delayed the problem and damaged trust on the way out. Real generosity in this space looks like long term commitments, open source contributions that you actually maintain proper engineering support behind the discounted license and the willingness to share skills as well as software. That's the difference between a marketing line and a movement. So more broadly, what are Jim's thoughts on what else leaders could be doing in this space?

Speaker A: Uh, I think that a lot of them don't want to. And so I think at one end of the spectrum you need to regulate them. And just like we regulate cigarettes or alcohol can't be provided to people under 21 or 18 or whatever your standard is. And the Australians, to pick an example, have banned social media from young teens and below So I think at one end, society needs to actually say, yeah, not that. And right now we're doing that in the areas that are in some ways the clearest kids are suffering. We should stop kids from suffering. And, uh, so I'm a big believer that when the tech industry has shown that it does not care, the secret stuff comes out and they're like, yeah, yeah, we're not going after teens. Oh, yeah, we're totally going after teens. The secret memo is all there. So that's at one end. Then I think there's a lot of products that are less problematic and, you know, the job of those companies just to do a good product. I don't need a human rights word processor if it's affordable, so you've got that kind of thing. And then I think companies can make these other decisions to say, I'm going to be a B corporation. I'm going to be a pledge 1% company. I'm going to make my product available to nonprofits for a discount or give that free license to someone like Jim to use that technology. It's a spectrum, right? I'm on the nonprofit side, but I run businesses. Right. You scratch the surface. I look like a SaaS company, right? I just, I'm a SaaS company with 10 people. But hey, it's a SaaS company. It's got all those roles covered. Sometimes one person has more than one role, but, okay. And then as you know, you get further and further down you go, okay, Then there's economic development charities. They're trying to train people who didn't finish their education or just came out of prison or developmentally disabled or whatever it is. And then you've got pure charity, right? You just got hit with, uh, a typhoon or a hurricane, and you need someone to give you water and a bed and food. Great. But I think this dynamic is, what problem are you solving? What's a good way to solve it, and what's the right model to pick? I, uh, wrote a paper years ago called For Love or Lucre. Whether to start a nonprofit or a for profit. When you have an idea that does social good, and the answer is the one that will work best. And a lot of the goal of writing a book, as far as I know, it's the first book on how to start a tech company that doesn't make money. That was my goal. Thousands of books on how to get rich with tech. This is a book about how to make impact with tech. And it's all about what are the great things in the Tech industry that we want to copy. Agile, lean, human, um, centered design, rapid prototyping, those things work. And they work better than the way the charity sector usually solves problems, which is, let's think about this and decide what poor people need as opposed to let's actually work with a whole bunch of poor people and figure out what actually works for them. And so I want to highlight all that good stuff. The fact that you can run a business, that you have to have marketing, that you have to do tech support. I want to make sure that people have all those things. But when a tech person comes up with an idea that can change the world and it is non investable by a big tech company or investors because it doesn't make enough money that they go, uh, well, I could still do it and I could still make a living at it. I just won't get rich. And I think a lot of people will choose that if they know it's an option.

Speaker B: So to bring this to an end, in a sense, if we said, do you think TechFlow can really exist within a for profit company? Then I guess if I was to guess at your answer, you'd probably say yes, if the intention is there and yes, if the model is appropriate to deliver what it is that you want to do. But there seems to be the need for that central mission to want to do the things that you're effectively doing, you know, as a result of not necessarily making a lot of money. Yeah.

Speaker A: Ah. And I think the other thing is that we in tech for good couldn't survive if there wasn't a thriving tech industry inventing the core technologies, building the open source technology. We're not going to justify creating a, um, $5 billion foundry for chips as the nonprofit sector. We just, we're not that big, so we depend on it. And we need the goodwill from a lot of tech leaders to really maximize our impact. But in some cases, I don't need the goodwill of whoever makes that mobile phone. I can write an app for it and they don't really care. And that's okay because they've created something that is a platform that enables me to go off and use that platform for something extremely cool, like, I don't know, helping a dyslexic kid learn to read or, you know, help a farmer figure out why her crops are dying, whatever it might be that's made possible because we have app stores and smartphones.

Speaker B: Thank you for listening to Tech Tomorrow brought to you by Zulke. If you'd like to learn more about what we do. You can find links to our website and more resources in this episode's show Notes. Until next time.