Kickstarter is now a Public Benefit Corporation
It is a common criticism of tech companies these days: They say they want to change the world, but what they really want to change is how much money they have in the bank (The New York Times, 2015). Businesses like Uber, Airbnb and Dropbox have all raised billions from venture capitalists and big money managers, with the aim of large profits. The Billion Dollar Startup Club, venture-backed private companies valued at 1 billion dollars or more, became three times as big in less than two years (Wall Street Journal, 2015).
And then there is Kickstarter, the popular online crowdfunding website that lets people raise money to help fund all manner of projects. The co-founders of Kickstarter could have tried to take their company public or sell it, earning millions of dollars for themselves and other shareholders (The New York Times, 2015). Instead, last month they announced that Kickstarter is the first big tech company ever that is reincorporating as a Public Benefit Corporation.
Public benefit corporations are a relatively new designation that has been signed into law by a number of states in the US. Benefit corporations are for-profit companies that are obligated to consider the impact of their decisions on society and the environment, not only shareholders (Kickstarter, 2015). Under the designation, companies must aim to do something that would aid the public and include that goal in their corporate charter. Board members must also take that public benefit into account when making decisions, and the company has to report on its social impact (The New York Times, 2015).
Kickstarters’ co-founders say they want to make choices that are in best interest of the company. Personally, I think this is a bold, positive step. They can be more focused on their overall mission and less on the value of their equity. They still can make profit, only consider profit to be the means and not the exclusive end goal of their business. I think companies that align their values with their customers and society will benefit over the long term. Let it be an example for the next generation of entrepreneurs.