Last Sunday Perry Chen and Yancey Strickler, Co-Founders of Kickstarter, announced that they were incorporating their Brooklyn-based crowdfunding company as a Benefit Corporation. With the stroke of a pen they have signaled to the markets that they will turn their collective backs on the time-honored tech IPO exit strategy in favor of long-term value creation.
It reads almost like a page out of Buffett’s playbook: attract patient capital, grow the core business and hold for the long haul; eschew the quick hit in favor of the steady return. But here’s the rub (if you’re a Traditionalist). Kickstarter must now consider the impact of their business decisions on all stakeholders (workers, customers, vendors, communities, environment, etc.) as a matter of law. Unlike other corporate designations that are legally bound to focus solely on creating shareholder value, Kickstarter is protected from not having to put profit before mission. Sounds quite liberating if you are a socially-conscious CEO, but it remains to be seen if mass-market publicly-traded Benefit Corporations can compete effectively head-to-head against traditional S and C Corporations and still yield positive social impact as well as returns on par with their competitive set.
It begs the question: are we witnessing a shift – perhaps driven by the oft-cited millennial altruistic ethos – towards a worldview in which one no longer has to choose between the right action and the profitable action? Can we, dare I say, actually create a scenario in which we can have both in equal share? Or, as us cynical GenXers would have it, does the marketing utility of the designation allow greater profits to be harvested from customers who will pay a premium accordingly? Quite honestly, this is a case where it doesn’t really matter. The result is positive. Voluntarily electing to hold oneself accountable to a defined social mission, higher standards of transparency and a requirement to consider the impact of Board decisions on all impacted parties – not just shareholders – is a good thing. And, with examples like Strickler and Chen, there is no doubt it can be profitable as well.
Kudos, Kickstarter. Well Played.