On Sunday, Kickstarter made a decision that appears to be in stark contrast to the usual trajectory of investment-chasing tech companies. The crowdfunding platform has elected to become a “public benefit corporation”–in other words, a company that is legally bound to prioritize its societal impact, and must be transparent about its progress year after year.
“We don’t ever want to sell or go public,” Kickstarter CEO Yancey Strickler told the New York Times. “That would push the company to make choices that we don’t think are in the best interest of the company.”
Instead, Kickstarter has moved one step beyond its designation as a B corporation–a title held by companies like online marketplace Etsy and eyewear startup Warby Parker. While Etsy, for example, is beholden to rules set by the B Lab organization, Kickstarter is now accountable to state laws. As B Lab cofounder Andrew Kassoy told Fast Company last year, “Benefit corporation is a legal status—like a C Corp or S Corp or LLC or partnership—conferred by a state.”
Opting to become a benefit corporation is still uncommon, in part because the designation is fairly new. In a blog post, the Kickstarter cofounders explain that their company is one of only a few that are prioritizing social responsibility over valuation:
Benefit Corporations are for-profit companies that are obligated to consider the impact of their decisions on society, not only shareholders. Radically, positive impact on society becomes part of a Benefit Corporation’s legally defined goals.
Kickstarter is excited to join a growing list of forward-thinking organizations — like Patagonia and This American Life — that have taken the big step to become a Benefit Corporation. While only about .01% of all American businesses have done this, we believe that can and will change in the coming years. More and more voices are rejecting business as usual, and the pursuit of profit above all.
Adopting a different strategy than Kickstarter, B corp Etsy went public in April at a valuation of $3.5 billion (though the company’s stock prices have since plunged, falling below even the IPO price tag of $16 per share). While socially minded, Etsy is unlikely to follow Kickstarter’s example; no public company has made the leap to designating itself a benefit corporation, likely because they are answerable to shareholders. Two years ago, baby food company Plum Organics did, however, come close: It became a benefit corporation under the watch of public parent company Campbell’s.
[via New York Times]