Imagine you start a company that sells wind. Like, literally, wind in packages of 1 and 3 kg. You think it’s a good idea (a genius idea, even!), because no one has had it before.
And anyway, people like buying sh** on Wish or Alibaba so much, it’s sure it’s gonna be a hit, and you’re bound to become the next billionaire once you sell your company to Facebook (to whom else…!)
So, you talk about it to two or three friends that you convince in 5 seconds, and you end up with CHF 50'000 of capital.
Two weeks later, on a Monday morning at 9am to be precise, you open your e-commerce site selling your wind bags in 1kg and 3kg versions.
Monday morning, 9:01 am. No sales. Well OK, people are just starting their work week so it’s not the best time to buy wind at this time. You wait.
Monday 14h, still nothing.
You say to yourself that you should have launched on Tuesday, because it works better this day.
Tuesday noon, still nothing.
The issues begin to arise, because you burned all the CHF 50'000 of capital with the production of plastic bags to contain the wind, and in the creation of your e-commerce website.
And suddenly, you have an epiphany:
But damn, I’m stupid, wind buyers, they spend their days looking for useless articles, in the evening, on Google. I just need to place some well-targeted ads, and that’s it! The only problem is that I have to find CHF 15'000 for my marketing!
You call some of your family members, and it’s done.
That same night, you launch your marketing campaign that sells hot air!
Fast forward a week later, and… still 0 sales.
You tell yourself that you must have misjudged your potential buyers, and that in fact, you think you know that they are nowadays more on Facebook and Insta (it seems that it’s more fancy to say Insta than Instagram, so I’m adapting ^^) than on Google. You need cash again, because well, you’ve already burned your CHF 15'000 at Google!
This time, you’re harpooning people a little further out in your surroundings, telling them that your genius idea is going to be a hit! Except, they ask you how many bags you have already sold…
OK, so if they don’t understand business, it’s not their fault. So you ask your colleagues, then you even go to startup incubators. But you always get the same door in your face…
But with unpaid invoices to produce your wind in 1kg and 3kg bags, you find yourself in the debt collection register, and prefer to close your company by declaring bankruptcy.
You guess that the world was not ready. And you decide to go for your new crazy startup idea, reassuring yourself that even Steve Jobs was misunderstood in his early days…
The moral of the story
Yes, we investors have a role and a responsibility to play by giving cash to the companies we invest in, so that our CHF make babies. But in the long run, those who have the (real) power to change which companies exist in this world, are the consumers (who also happen to be ourselves). Because without consumers, there is no cash coming in, and investors (as well as the stock market indexes that our dear ETFs mimic) are not going to hold on to such a company that is selling on a cash infusion. On the contrary, they will quickly move on, and give the seat to another company that answers a real need with real customers.
And that’s the key to pushing the world in the right direction (i.e. the right direction being the one you feel is aligned with your values): by consuming yourself in such and such a way, and by showing this way to the people around you.
The idea for this article came to me as I was wondering if I influence the world more with an investment into a VT ETF, or via my purchases as a consumer.
My conclusion is that my greatest power to influence which companies make up our world (according to my vision and values) lies primarily in my consumption, as well as in what I teach my children and via this blog about frugality and conscious consumption.
Because in the end, in the long run, companies that sell wind will eventually disappear from the indexes I invest in, because they will run out of customers, and therefore cash. While those that still have customers will continue to operate (even without investors).
After that, it’s easy to avoid feeling guilty if we turn a blind eye to companies that are less aligned with our values in an index. Because even though we are not consumers of them, we will remain their cash infusion provider for a while yet. But until not so long ago, it was either too complex or too expensive to put your money in sustainable investments called ESG (for Environment, Social, and Governance). Except that things are changing, and in a good way in this field. And it’s finally becoming interesting from a purely investor’s point of view, so I expect to talk about it in more detail in the future.
And you, what do you think about the power sharing between consumer and investor? (let’s keep it constructive in the comments because I know it can get pretty subjective :) — any political comment will be deleted)
PS: and above all, in addition to your opinion, I would be interested in finding economic research papers on the subject with data explaining whether my reasoning “consumer > investor” is quantifiable in any way