National Consumers League

Kickstarter advances public responsibility over profit

sg.jpgAs game-changing technologies like Uber, AirBnb, and Dropbox consider going public with profitability for founders and investors in the billions, it is interesting to read that Kickstarter, a crowdfunding startup, is choosing to take another course.

The founders of Kickstarter are opting to become a B Corporation, which is a voluntary designation certified by a nonprofit group called B Lab. According to the New York Times, B Lab requires companies to meet rigorous environmental and social responsibility standards, which they report annually to their shareholders.  And according to the B Corporations website, “B Corp is to business what Fair Trade certification is to coffee or USDA Organic certification is to milk.” Although the status has no legal impact, it does speak volumes about Kickstarter’s vision and commitment to better business practices. The e-commerce site Etsy, which went public in April, and Warby Parker, the glasses retailer that is injecting some much needed competition into the prescription glasses market, are two other companies that have decided to become B Corporations. The B Corporations website reports that the growing number of Certified B Corporations from 33 countries and over 60 different industries are all “working together toward one unifying goal: to define success in business.”

I think these new technologies are exciting and incredibly good for the market. But so often a few lucky and ingenious entrepreneurs and their equally lucky investors earn the vast majority of the profits when the companies go public. Kickstarter founders Perry Chen and Yancey Strickler have very clearly conveyed that they do not want to go public in the New York Times piece saying, “We don’t want to ever sell or go public … That would push the company to make choices that I don’t think are in the best interests of the company.”

Kickstarter has been profitable in the last three years at the tune of about $5-$10 million and pays dividends to investors and shares profits with employees. Both founders own stock and will earn income based on their initial investments as the company grows and earns profits. Kickstarter also donates five percent of its profits to groups that fight inequality and to others that promote the arts.

The Kickstarter business model allows startups to put their idea before the public to determine whether these ideas are worthy of investment. It is a worthy mission to advance business in the name of accountability and transparency, which Kickstarter and all B Corporations are committed to doing. Other companies would be doing a service to all consumers by committing to do the same.