Continuing to think about a venture capital investment thesis…

Umair Haque, Google, China, and the New High Ground of Advantage:

An ethical edge just might be the ultimate cause of advantage. It’s how better distribution, production, marketing, and pricing — all just proximate causes of advantage — ultimately happen. Jim Chanos’s investment thesis says: without an ethical edge, new value cannot be created — old value can only be shuffled around (hi, Wall Street).

Ethical edge is advantage reconceived for the 21st century. It’s an institutional innovation: the institution of “advantage” rebuilt for a threadbare, fraying, global economy. It’s a radical new definition of “advantage” that blows past the stale, tired idea of competitive advantage.

It’s time for a great reboot. Today’s great challenge isn’t blindly building countries, companies, or households on a broken set of institutions. It is reimagining new institutions for a hyperconnected world. Answering that challenge begins, from my tiny perspective, with an ethical edge as the cornerstone of every kind of organization. Seeking an ethical edge is the truest test of a Constructive Capitalist. Google just passed it. China — like Dubai, Russia, and yesterday’s mega-corporations — is failing it spectacularly.

This isn’t just about “social entrepreneurship”: doing good = good business strategy.

I would argue that an ethical edge can only be a competitive advantage in a hyperconnected world. Rising hyperconnectivity and the increasingly publicly available trails of intentions and actions by individuals and corporations are creating the opportunity for an ethical edge to “pay” in a wider range of products, markets and industries.

This isn’t a new concept: in fact, it’s a return to our roots, an retreat from the aberration of the industrial revolution.

The final takeaway: any investment thesis today should be based on injecting humanity and creating authentic value for a society and economy ready to move beyond the massconony.