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Is It Immoral To Earn Attractive Profits From Poor Customers?

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Why Give a Damn:

There are profitable virgin markets serving poor customers all over the world just waiting to be tapped; however, is it immoral to create a business that earns profits selling to the poor?


The author of this post, Paul Polak, has brought 20+ million farmers out of poverty. His work is dedicated to designing products for the 2.6 billion customers who live on less than $2/day.

There are at least 7 billion different perspectives on morality, but the viewpoint I like best defines sin as the failure to reach your potential.  Tweet This Quote

By this definition we have at least 2.6 billion deep sinners – the 37% of people in the world who live on less than $2 a day. They are the future Steve Jobs’, Mohandas Gandhis, Madame Curies and Pablo Picassos who will instead eke out a living as drug dealers, child soldiers, prostitutes and destitute slum dwellers.

The three trillion dollars or more we have wasted in misguided development aid probably represent an even bigger sin. But it seems to me that the worst sin of all is our abject failure to achieve scale for the handful of projects that have produced measurable positive impacts on the lives of poor people.

How can we successfully achieve scale? It takes planning and designing from the very beginning, and the unleashing of powerful positive market forces at the locations where poor people are buyers and sellers. The only way to unleash those forces is to demonstrate to global businesses that they can earn attractive profits selling transformative products to poor customers. This is exactly what I have dedicated the rest of my life to accomplishing.

But, I am not an economist. How do some of the world’s leading economists view the prospect of earning sizeable profits serving poor customers at scale?

Is it immoral to earn profits selling to poor customers?

“No!” says Milton Friedman, the celebrated free market economist.

“…there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.” Friedman believes that a marketplace of enterprises earning profit within the rules is the most powerful lever to improve society.

“Yes!” says economist and Nobel Prize winner Muhammed Yunus.

“Poverty should be eradicated, not seen as a money-making opportunity.” Yunus believes that investors in social businesses should only get their money back. In my view, that adds up to a sizable interest-free subsidy, which is a constraint to scale.

Why do I believe that the answer to extreme poverty is to earn attractive profits serving poor customers?

The microfinance movement and the work of iDE combined have probably helped about 50 million extremely poor people move out of poverty. Even if we have helped 100 million poor people move out of poverty, this amounts to less than 4% of the 2.6 billion people in the world who live on less than $2 a day. This is pitiful!

I define meaningful scale as any strategy or initiative capable of helping at least 100 million $2-a-day people move out of poverty by at least doubling their income. We desperately need to find ways to bring to scale the few comparatively successful models for development that are available.

What are the common features of initiatives that have truly helped extremely poor people move out of poverty?

  1. They begin by thoroughly listening to poor customers and thoroughly understanding the specific context of their lives.
  2. They design and implement ruthlessly affordable technologies or business models.
  3. Energizing private sector market forces plays a central role in their implementation.
  4. Radical decentralization is integrated into economically viable last mile distribution.
  5. Design for scale is a central focus of the enterprise from the very beginning.

It is clear that all of these factors are integral components of a business system, but this takes us back to the original question: should it be a business system that enhances the livelihoods of poor people without making a profit for outside investors? Or should it make a profit for investors as well as the poor people who are served by it?

The only way for a business to help at least 100 million poor people move out of poverty is to follow the laws of basic economics.  Tweet This Quote

To me the answer is obvious. The only way for a business to help at least 100 million poor people move out of poverty is to follow the laws of basic economics, which means providing an opportunity for both poor and rich investors to earn what they consider to be an attractive profit from their participation.

I have no doubt that there are huge profitable virgin markets all over the world serving $2 a day customers waiting to be tapped. By the laws of economics, creating a new market requires taking a very large risk, but the reward should be commensurate to the risk. If the new venture is successful, all the investors – the poor customer who buys the product, the shopkeeper who sells it, the company employee who makes or transports the product or manages the supply chain, and all the financial investors in the company – should make an attractive profit.

Here is an example: Coal contributes 40% of global carbon emissions and releases millions of tons of heavy metals and other pollutants every year, worsening climate change and sickening people around the world. Properly carbonized biomass can be substituted for coal and co-fired alongside it in proportions up to 80%. The world’s farmers produce four billion tons of agricultural waste each year. If 100 million tons of this agricultural waste could be effectively and affordably carbonized in decentralized rural settings, a multinational enterprise finding a cost-effective way to make it happen could reach global sales of $10 billion a year within five to ten years. Such a company would not only provide attractive profits to investors willing to take on the substantial risk involved, but would furthermore double the incomes of at least 100 million $2-a-day enterprise participants in developing countries.

The only way a company like this can reach scale is with the financial backing of for-profit venture investments. And the only way to justify those comparatively high-risk, early-stage investments is if the company provides the opportunity to make exceptionally good profits if it succeeds.

We have two options:

  • One is to keep hoping that governments will come through with billions of new aid dollars, keep asking individuals to dig deeper for charity dollars, and hope that the low-or-no-profit venture capital space takes off and becomes a truly global phenomenon. We could plod along full of hope but low on results, celebrating increases in impact of fractions of a percentage point.
  • The other option is to blend the designer’s sensibility, the artist’s creativity, the ground-level aid worker’s understanding of local context, and the entrepreneurs’ dynamism and drive for success, and create profitable global companies that serve poor customers with products and services that help them rise out of poverty. We could unleash the full power of the greatest force in human history – profit – and start ending poverty by the hundreds of millions.

It would be immoral to do anything else.

Burning Question:

Do you agree with Milton Friedman, Muhammad Yunus, or with Paul Polak? Why?


Update: Please watch this video to learn my thoughts on designing the future corporation.



This article is being re-featured today as a special “Throwback Thursday” post. We loved it so much, we wanted to make sure all of our new readers had a chance to read Paul’s article, (and share in the conversation).

Paul Polak

About the author

Dr. Paul Polak is Founder and CEO of Windhorse International, a for-profit social venture with the mission of inspiring and leading a revolution in how companies design, price, market and...

Paul Polak has written 20 articles for UNREASONABLE.is

  • Ron Garan

    I agree 100% with the notion that successful business practices can lead to substantial poverty reduction worldwide. I also think this has been the missing link and why we still face so many problems after countless years of philanthropy.

    I do need to correct one assertion of the post though.

    I am the scientific and technical advisor to the Social Business movement and a personal friend of its founder Prof. Muhammad Yunus. Prof. Yunus does not condemn profit making businesses. He does not assert that businesses that serves the poor cannot make a profit. The quote from Prof. Yunus in the post is taken out of context. What Prof. Yunus is actually saying (backed up by the same article cited) is that he thinks it’s wrong for businesses to grow rich by preying on and taking advantage of the poor. It is true that Prof. Yunus defines “Social Business” as a business that does not pay dividend or give a return on
    investment and all profits go back into the social or environmental good the
    business was created to achieve. But this type of business is to be seen one
    of the many entrepreneurial solutions available to choose from across the
    entire spectrum of available business options. Prof Yunus is not saying that
    his definition of social business is the only option. The only thing that he
    does condemn is businesses that take advantage of the plight of the poor. Any
    business that serves the poor should have somewhere in their calculation the
    long-term benefit of their impoverished customers – they should not be viewed as a resource to be exploited. This is good business…

  • natebbeard

    Ron, would you say Paul and Yunus take inherently different business approaches to address poverty? If so, do you think the main differentiating factor in their approaches is found in the ROI of a project to the stakeholders directly involved in the business development process? There seems to be a fine line between profit and exploitation that make people wary when businesses get involved in previously classified social problems, but do you think producing some type of dividend or return to investors and leadership would create a stronger demand for talent and creative solutions in this industry?

  • natebbeard

    Wal-Mart is an interesting example and analogy I haven’t really scrutinized from a social initiative. Thanks a bunch!
    I’m not sure we have to steer or regulate capitalism though, and maybe this is purely a futile challenge of word choice because we’re all saying the same thing. I feel like self interest is indulged in by short term returns that ultimately hurt the individual in many cases – directly and/or indirectly. So could you say that instead of regulation, capitalism can be best utilized by a long run understanding and far reaching goals that directly benefit the individual? Maybe humans just have a flawed understanding of what capitalism is at it’s core and have attributed externalities to capitalism because of this lack of systems understanding? (This is mainly from John Sterman’s work at MIT – not my own words exactly :)

  • Morgan Dowd

    I think there are many businesses today that are reaping from the poor. However, it is moral to do so only if the benefits outweigh the cost. Taking away money for no reason is one thing. Using money for their behalf AND making a profit is another. I know their are companies that exist today with that idea of providing a product to help individuals reach a goal. Those are the types of companies I can stand behind!

  • katie yanke

    Morgan, I agree with you that companies that use their profits to help the poor is beneficial and something I stand behind too. It was definitely eye opening to learn how many people live on only $2 a day. Thanks for the article Paul!

  • Ron Garan

    Nate speaking for myself, I personally think it is OK to find profitable ways to serve the poor. Not only is OK, it is really the only sustainable path to poverty alleviation. What you do with that profit is a question. I also don’t think there’s anything inherently wrong with distributing that profit to investors but I prefer to invest and I prefer to be involved with companies that use that profit to expand their operations (and the good they are providing) and use the profit to create more social and environmental good. There’s also no reason why companies that choose to act in this manner can’t pay competitive wages to their employees in an effort to attract the best talent.

  • Kait Harman

    This could be quite a debatable topic but everyone should be aware of each side of an argument. All though I believe it is pitiful to make only $2 dollars a day I do not believe we should not sell to poor people? A customer is a customer in my eyes. It is sad seeing countries, cities and people live in poverty but our world will never be equal. It never has and it probably will never be.

  • Tyler Steinmetz

    I agree with Mr. Paul Polak completely that we should use business practices that help reduce the poverty level around the world. I really believe that big corporations should not be receiving profits from the poorest people in the world, but in reality, someone must get paid. The investors should make a profit, but I really think that the poor people that are served by the companies should receive some of the profit as well. This is such a touchy subject to me because I really believe that we should not be earning money from people that are making under $2 a day. Sometimes this is the easiest crowd to sell to but I do not think we should take advantage of the worlds most disadvantaged individuals. How long do you think it will take to see companies such as Coca-Cola and Walmart to suffer from the same fate that GM had?

  • nvuong

    Aid, as it were, is not just giving people money to fix their problems. Aid should be teaching that man how to work to bring money home. Teaching marketable skills, and helping to develop serviceable communities. If people make profits while doing this, who cares?

  • Caitlin Donohue

    I agree with this article. I don’t think it’s bad or unethical to sell things to poor customers. They’re going to buy things anyway so why not be the one to sell it to them? One positive thing is making whatever they want/whatever other people have more affordable for them.

  • jack lomax

    it’ll never be equal with an outlook like that! lol
    But in all seriousness you are right. We have the POTENTIAL to be equal, but the level of greed in the world, and the lack of cohesiveness and common goals on a global scale means priorities aren’t “lets end poverty”, its more “lets see who can make the best phone” (when they are all the same anyway!) and “lets see who can make the most money”. It’s disappointing that we have the means and the potential to change the world, but we won’t. And that sucks.

  • Matthew McDonald

    In economics, the market decides. I believe the entrepreneurs who can make a profit should do what they do. However, responsibility needs to be had. I don’t advocate proliferating capitalism just so we can make more money. I believe it should be a responsibility of ours to create value in markets by helping the poor, rather than exploiting them. Then, the markets will grow.

  • WolfgramKA06

    Thank you for this article. It’s great to see that we can make a difference to the less fortunate by helping them live off of their $2/day. It’s difficult to understand how the economy is so misguided at times. My question to you is, how do you think your ideas of helping these “poor customers” over the next few years? Do you see innovations with technology or certain products that can help in a greater way?

  • schrammjm26

    This is a the best article I have seen on here for creating discussion because it is so controversial. If everyone had the mindset to take care of everyone then it would be realistic to eradicate poverty and allow everyone equal opportunity. In my opinion however this is nothing more than a dream. I obviously have a bias opinion because I was brought up with a family that provided me with more than enough in my life, live has also taught me that you cannot make everyone happy. I have learned to focus on helping those who I care about and have personal connections with and I would rather make a life changing impact on one person I care about than a microscopic impact on millions. I realize that this is selfish and maybe my perspective would change if I were in a position to help millions, when it comes down to business though, money will always be the bottom line. I find that there is a strong element of Darwinism in human nature and I believe it will always be there. Some people are gifted with the passion and resources to help millions but the majority of the world will be perfectly content with helping the people that are closest to them. There will always be a cost to any business and more times than not those in less fortunate positions will end up paying the price. This is simply the price that must be paid to evolve as a race. Every other species aside from humans are still in existence because the strong come together through primal instincts to ensure their survival. From a logical and non-emotional standpoint this is what humans should do for the betterment of the human race. From an emotional stand-point this would be morally wrong and irresponsible. There is no clear right or wrong here.

  • jeffrey schilling

    Not only is it imoral, but in gods eye aa true sin against humanity itself, and that is why this world as we know it is headed straight to hell in a handbasket and just as well since nobody seems to want to speend a damned red cent to make it more livable planet!!!!!

  • aulm92

    Matthew, I was trying to put my thoughts into post when i came across your post. I really think you hit the nail on the head, it is our responsibility to create value and help the poor and by doing so the markets will grow and everyone will profit.

  • Max Rude

    This is what I believe also. We can still sell to a poor customer if we can take pride in what we are selling. Why would anyone be morally wrong to sell an item of worth to a customer who needs/will buy it regardless.

  • amykahl8

    I think that if someone was targeting poor people to sell his products to in a dishonest way that would be very immoral. However, since you want to provide them with business opportunities and help them move out of poverty, this is obviously a positive thing. My only question is how exactly can you get them to trust you?

  • Leija2014

    I agree with your comment! We are all consumers, so why not be the one to sell them products. I think the true sin is making money and not giving back. If I made so much discretionary income from the poor, I would donate to their charities.

  • amandatwolf

    I can see how business operations in poor areas are a controversial topic. Ultimately though, I see no reason why it would be inherently immoral to cater to a poor market. Ultimately, it’s the buyers choice if they decide to purchase something and providing a poor target market with a good that could potentially improve their lives seems like a positive thing. Of course, context is important to consider as well. As long as the business isn’t exploiting the people or doing anything to make their living standards any worse, I see no reason why this would be immoral.

  • Caitlin Donohue

    Yes, that’s a good idea to do as well. Possibly even give to a charity that somehow touches the people you are selling too. That could build a great relationship!

  • kalscheuar30

    At first I wasn’t going to read this article because it looked long. However, I really dug the title so I continued. I thought it was awesome how you acknowledged that people in poverty have the potential to be successful but instead living their lives as drug dealers, child soldiers, etc. That’s the reality, from first hand experience I know what it’s like being a dealer, thief, and con due to lack of money and opportunity. Is it immoral to earn attractive profits from the poor? Yes, if you’re some a$$hole only looking to benefit yourself. That my friend is a way you’ll get robbed at gun point, or have your house broken into :). However, your approach is beneficial to everybody and is beyond admirable. Taking the time to listen to poor customers and doing something to help them, that’s anything but immoral. It’s immoral not to help them. How are people going to get out of poverty (legally) with out an opportunity!? My question is did you originally approach this in order to do good AND help the poor? I read your whole article but I’m curious, what was your TRUE originally intention?

  • eeki

    fine but let´s talk about profit sharing. who wins?

  • lex_alwaysMIA

    I agree, what was the true intent of this article? When you read an
    article or hear issues addressed to the poor, there is no positivity
    about it. Poor neighborhoods and communities are blamed for higher
    taxes, property values decreasing, and other discriminative attributes.
    If you put anybody in a situation and it’s based upon survival, you see
    these actions. In the United States, everything revolves around money,
    power, and respect. The rich will continue to gain while the poor is
    penalized for their financial status. Great article, I hope your intent
    was genuine.

  • masterdan55

    Thanks for posting this article! Had some good insights and was brought out some good conversation within my friends. People in poverty need all the help they can get. What is the first step to helping communities in a poverty ridden area?

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  • Steven Bichler

    This article made me think in new ways. In one hand it is very businesses right to make money, thats what they are meant to do. However their are certain morals that you just shouldn’t break. I stand on the fence on this issue, all sides have very valid points as to why theirs make sense.

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  • evillarr6

    I don’t have any moral opposition to earning honest profits from those in poorer areas. No one is forcing people to buy goods/services from these new businesses. Also, creating businesses in poorer areas could increase job opportunities for those struggling.

  • Murugi Kaniaru

    This is an interesting question to consider. I do not believe it is immoral to sell to those in poor communities because the nature of the free market is buying and selling. However, I do believe it is immoral to exploit a community group if one is aware of the financial state of that group.

  • anujaya

    I don’t think there is anything immoral about profiting from a poor group of people as long as you’re doing it honestly. Honestly in the sense, selling products and services at a reasonable cost, treating the customers with respect, and not causing significant turmoil in the communities you operate in. But these are things that a business owner should think about when selling to the top 1% as well. It’s just good business ethics.

    Also, I like the quote, “We should let some people get rich first,” by Deng Xiaoping. The way most countries have developed, the poor get richer and rise to form a middle class as the previous middle class and upper classes move up and get even wealthier. Is it perfect? I don’t think so. But, from everything I’ve seen, that’s how economics and people work.

  • Bangyan Zhang

    With my opinion, I think it is not immoral. However, helping people, improving their life, bringing something really useful for those people. Those are the critical purpose for companies to earn money. Profits is business. But if we can bring happiness to those persons who are poor, it is an amazing business as well. Earning money and bring happiness. It should be business.