If the Shoe Fits: Kickstarter, PBC — a Winner’s Choice
by Miki SaxonA Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here
Do you have values?
Do you clearly articulate them your team?
Do you strive to incorporate them into your company’s culture?
Do those values include building a sustainable business, kind to the environment, gives back to its community and actively contributes to the wellbeing of its workers?
Will you stay true to those values while growing, when both eyes are on the revenue/profitability of your company?
If so, you could apply to be recognized as a Certified B Corp, like Warby Parker, Etsy, and the Honest Company.
B Corp status is a step in the right direction — but…
When push comes to shove it’s not legally binding.
Public Benefit Corporations (PBC) are a step above and beyond.
And Kickstarter just joined their ranks.
There’s a profound distinction between a “public benefit corporation,” or PBC, and a “B Corp,” co-founder Perry Chen told me during a recent visit to Kickstarter’s Brooklyn headquarters. Both are for-profit companies who wear their missions on their sleeves, but B Corps have no legal responsibility to uphold their values. PBCs, on the other hand, have a legally binding duty to provide benefits to society. One is an accreditation, like “Fair Trade,” the other is an entirely rethought corporate structure.
Put another way, if a PBC puts maximization of shareholder value — the true north of Wall Street — ahead of the public benefits it declares in its charter, it can be sued by its shareholders.
“A value is only a value if it’s non-negotiable,” Chen told me. Kickstarter’s values are now codified in a legally binding document. They’re literally non negotiable.
What are those values?
In section one, the company restates its mission — thereby enshrining that mission in its legal foundation. The second sections lays out the company’s values, taking aim at five highly political corporate issues: Selling user data to third parties (it never will, unlike Google, Facebook, and pretty much most of the Internet), clarity in “terms of services” (it won’t seek legal gains just because it can, unlike, well, pretty much the entire Internet), political lobbying (it won’t lobby unless the issues aligns with its values, regardless of potential monetary gain — unlike … you get the picture), taxation (it won’t employ the “esoteric tax management strategies” beloved by giants like Apple, Uber, et al), and environment (the company is committed to reducing its impact across the board).
Most businesses incorporate in Delaware where the legal PBC framework was signed into law by Gov. Jack Markell in 2013.
Public Benefit Companies are a relatively new legal entity — Delaware, where many fast-growth startups incorporate, created PBCs just three years ago. Besides defining a public benefit as “a positive effect (or reduction of negative effects) on one or more more categories of persons, entities, communities or interests (other than stockholders in their capacities as stockholders),” Delaware’s code allows new PBCs to make “further commitments” beyond the state’s legal definition.
Method, Plum Organics, Alter Eco, and New Leaf Paper are all PCBs.
Kickstarter could just have easily chosen the road to unicornism, but chose their values instead.
What will you choose?
Image credit: HikingArtist
