NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

It’s time to retire the term “social business.” Better to run a business that honors agreements and respects the dignity of employees and customers.

A sturdy bicycle built of recycled cardboard and sold to the world’s poor for $20 apiece? This story broke in 2012, complete with a YouTube video of inventor Izhar Gafni toodling around his Israeli settlement town on a beautiful white prototype, the cardboard rendered surprisingly strong through an innovative combination of origami-style folds, glue, and varnish. But two years later, only a handful of prototypes have been made, and an Indiegogo crowd-funding campaign has fizzled.

Why hasn’t the project taken off? One possible culprit: “social business.”

After talking up the virtues of a “social business model,” the start-up behind the bike, Cardboard Technologies, expended considerable energy trying to raising capital from Indiegogo donors uninterested in profit. The lack of a profit motive may have played a role. It also didn’t help that the price of the bike kept shifting—from $20 to $290 to $95 plus $40 shipping. Would-be investors had to wonder: Was the bike going to have a revolutionary everyman price, or wasn’t it?