The meaning of mission statements

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“WE ARE A community business committed to maximum global impact. Our mission is to raise awareness of the world. The opening lines of WeWork’s prospectus for its scheduled 2019 IPO seem to confirm the worst of mission statements. People sit in a room seriously discussing the differences between their purpose, vision, and mission. There are whiteboards and bottles of kombucha. Nonsense follows.

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But even the mouth makes sense. For start-up investors in particular, the mission statement sends out useful signals. It articulates what a company does and gives clues about its priorities. This information is all the more important when the founders exercise disproportionate voting power. The WeWork prospectus helped make investors aware that the real estate company had lost its balls. WeWork ended up deleting both its list and its boss.

To see why mission statements deserve more than a quick glance, first look at the entities that are lacking. Of the 58 prospectuses filed with the U.S. Securities and Exchange Commission in the first two weeks of this month, more than a third were for special purpose acquisition companies. After-sales services are a type of shell company whose purpose is to raise funds for a future unspecified agreement. They are the absence of embodied purpose.

“We have not identified any potential target for a business combination, and we have not, nor anyone on our behalf, entered into substantive discussions, directly or indirectly, with a potential target for a business combination,” says a After-sales service deposit of presentation text. Investors are warned: their money could end up just about anywhere.

Mission statements contain multitudes in comparison. They can tell you which stakeholders matter most to a business. A small handful of non-After-sales services to be filed this month say their goal is shareholder return (call it a Milton statement). Most set their goals in terms of meeting customer needs.

Lulu’s Fashion Lounge says its vision is to be the # 1 valued women’s brand for affordable luxury fashion. AirSculpt Technologies, a “body contouring” company, aims to produce the best results for its patients. It may be the age of the goal, but giving people what they want, whether they are looking for clothes or a “Brazilian butt lift procedure” is mission enough for many entrepreneurs.

The mission statement can also tell investors how technologically sophisticated a company is. Among this month’s depositors is a glaring lack of flannel from GlobalFoundaries, a large semiconductor company. But for simpler products and services, it is not enough to describe what a company does. “We aim to help customers in our communities live good lives by inspiring moments that create lasting memories,” exclaims Solo Brands, whose biggest seller is a stainless steel fireplace.

Likewise, you might have gotten the impression that Krispy Kreme, who returned to public markets earlier this summer, is selling donuts. Wrong. “As an affordable indulgence enjoyed across cultures, races and income levels, we believe Krispy Kreme has the potential to deliver joyful experiences across the world.” It’s not the icing on the face, it’s the euphoria.

A mission statement also illuminates the clarity of thinking. Among the companies to have filed this month, NerdWallet, a company that provides financial product reviews and comparisons, deserves the most praise. “Our mission is to clarify all of life’s financial decisions,” the prospectus explains. It’s ambitious without being absurd, informative without being restrictive.

Others are more woolly. The prospectus from Rivian, an electric vehicle maker, says he wants to “keep the world adventurous forever.” Potential investors are told that “the part of us that seeks to explore the world is also the secret to making sure there is a world left to explore.” Still, the company’s short-term earnings depend on a large order from Amazon for its electric delivery van. The part of us that plans on never leaving home may be Rivian’s secret to prosperity.

As for WeWork, it’s back and mellowed. Its public debut, via a merger with a After-sales service called BowX, was due October 21. In a proxy statement released by BowX in September, WeWork said it was founded in 2010 with a vision to “create environments where people and businesses come together and do their best.” No mission creep this time.

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This article appeared in the Business section of the print edition under the headline “Why Mission Statements Are Important”


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