 My name is Rick Alexander. I'm the head of Legal Policy at B-Lab and I am very happy to have a very distinguished panel with me today. I'm going to introduce them. I'm going to talk a little bit about terminology, what exactly a B-Corporation is and what it's not. I'll talk a little bit about why it's been created, but spend most of the time talking to these entrepreneurs and investors who really are great examples of what the Benefit Corporation movement is all about. To my immediate left is Davis Smith. Davis is the CEO, the founder of Cotapaxi, an outdoor gear company. He's a serial entrepreneur. He also is founder and co-CEO of baby.com and dinda.com, Brazilian companies. He was also founded a company called Pool Tables, which he also sold. So he's a very successful entrepreneur and currently invested in a Benefit Corporation or running a Benefit Corporation. To Davis's left is Kirsten Green. Kirsten brings 20 plus years of investment experience to the startup world. She's the founder of Forerunner Ventures, which has made over 30 investments, including two in Benefit Corporations. Davis's company and also Warby Parker, so very happy to have her and get the investor viewpoint on investing in Benefit Corporations. To her left, another serial entrepreneur, Maxim Antilla, who founded Kryptian Systems, Ardvark. He spent time at Google, where he was on the founding team of Google Plus and head of personalization. And to his left, we have Brian Singerman. Brian is a partner at Founders Fund, where he spent since 2008. Before that, he spent four years at Google, where he founded iGoogle. He also started his own angel fund and spent time at another startup. So we have a very distinguished panel and we're going to talk to them. The two entrepreneurs started Benefit Corporations and the two investors made a decision to invest in Benefit Corporations. And I want to talk about that. The first thing I'd like to do is get a little bit of terminology out there. The Benefit Corporation is a legal form. Right now, there are 31 states that have adopted Benefit Corporation legislation. And the important piece of that legislation is that it allows the directors of corporations to, in considering sort of their primary beneficiaries as fiduciaries, to consider the interests not just of stockholders, but of all stakeholders. This allows them to truly incorporate environmental, social, and governance factors into the core of their business. We all know today that environmental and social factors are important in business and we see lots of businesses incorporating them. But as a matter of corporate law, the ultimate purpose of doing that is still, for most corporations, increasing stockholder value, increasing share value. Benefit Corporation status is a way to say what we do, the social good we do, the environmental impact we make, is not just an instrument of shareholder value. It's as important to us as shareholder value. It's core to what we do. And what we want to talk about today is how entrepreneurs can use that and how investors can get comfortable with that. One more small point I want to make, and this is really a terminology point. I work at a nonprofit called B-Lab. B-Lab certifies companies as being triple bottom line, good for the world. So when you get that certification, you're a certified B-Corporation. There's a lot of confusion between the term benefit corporation, which is a legal term. It conveys your legal status and B-Corporation, which is just the type of corporation that we certify. Now to get our certification, you do have to take the legal form in addition to meeting all the performance standards. So that's sort of the terminology. The last point I'll make before we talk to our panelists is to say sort of how important I think this movement is and how important it's becoming. We really just started passing the legislation a few years ago. There are now 3,000 benefit corporations registered in the United States. I think you probably also on the paper a couple of weeks ago, a well-known company Kickstarter announced that it was converting to benefit corporation status. What you may not have heard is that on Friday, a company backed by KKR, a privately held company sponsored by KKR with 4.5 billion with a B dollars in revenue filed an S-1 to go public. And the financing is going to be led by Credit Suisse, Morgan Stanley, and Barclays. And that's pretty exciting for us. The company is called Laureate Education. So that's the intro. And now what I'd like to do first is turn to our two entrepreneurs and ask them really to tell us a little bit about your business. David, you can go first. Tell us a little about your business and maybe tell us what it was about your business that made it a good fit with this legal form. Yeah, so I hadn't actually ever heard of a benefit corporation until around 2011 or 2012. At that time I was living in Brazil. I was running another company that I had started there. And it instantly resonated with me. I had grown up in Latin America. I moved there when I was 4 years old. So I'd grown up in the developing world. I'd spent about half my adult life there. And I feel really blessed that I was able to see and really develop empathy for people that really has kind of become core to who I am. And I remember as a 3 or 4 year old seeing kids on the sides of the street that were my age that were completely naked. And it's the first time in my life I felt empathy for someone else. I remember as a child feeling that. And so it's something that's been core to who I was and am. And so I knew that at that point that whatever business I did next I wanted it to be a benefit corporation. It spoke to who I was as a person the way I wanted to build a business. And so when I moved back to the States I decided to start a company, an outdoor gear company, where all of our products raised money for humanitarian causes around the world. We focused on 3 pillars, education, healthcare and livelihoods. And we make just the most amazing outdoor gear. You can think of it as kind of a Patagonia but for the young millennial generation just really kind of fun and funky colors and just amazing gear. But we make the products responsibly. And when we were incorporating I was talking to an attorney that I used before for my last business and was telling him how I wanted to incorporate as a benefit corporation. And his advice to me was to not do it. He said you should first incorporate as a C corp and then down the road you can convert to a benefit corporation later because he said investors have never, they've never done that before. People have generally converted because it was such a new entity. But I decided this was core to who I was and core to what I wanted the business to represent. And so I incorporated as a benefit corporation from inception. We never as a public benefit corporation. And I started fundraising and I met Kirsten. I told her about the vision that we had for this brand and the kind of business we wanted to build. And I talked to a lot of other investors and I was shocked to see that not one investor came back and pushed back about the benefit corporation. They loved the fact that it was something that I was so passionate about and that it was so core to the brand and what we wanted to build. So you had it wrapped in from day one? From day one, yeah. Max, tell us a little bit about Alt-School and a little bit about how it fits the benefit corporation model. Sure, so Alt-School is really a new model for what education could look like in the 21st century. And it's not ed tech, it's not schools, it's kind of all of the above. So we now run seven locations starting out K through 8 private. But what's exceptional is you've got, you know, 45 educators and 45 engineers. You know, there's not another kind of organization that has a one-to-one ratio at that scale. And what we can do in terms of being like a full-stack company out of the gates to say, you know, we're not trying to sell tablets to public schools. We're also not trying to like, you know, scrape by as a nonprofit school this year. We're actually able to start from first principles and say, what would the ecosystem look like that would actually make it much easier to start and run the kind of school that not only would we be happy to send our kids to, but actually that gets better the more people are sending their kids to that school or that ecosystem. And, you know, that's the norm outside of the ed space. That's not the norm in the ed space. If I asked kind of parents here, would you rather, your kid went to a school with 200 kids or 200,000 kids, you know, you'd say 200 kids. And that's actually like a terrible answer from the perspective of society. So we really want to kind of flip that over the very long term, starting with ourselves as being the only inhabitants of that ecosystem, but ultimately, obviously being just one of many pillars supporting an ecosystem that has, you know, a universe of parents and educators and students participating. And, you know, we started out as a C-Corp, but very much with the intention in the Series A to have that dialogue with investors and convert to a B-Corp. A buddy of mine started a company called Good Eggs that was already a B-Corp, so I was somewhat familiar with it. And, you know, it was like, correct me if I'm wrong, Brian, but it was like a five second conversation, you know, in terms of like, okay, long term mission driven, want to transform, like why are you becoming a B-Corp? What are the consequences? Yeah, it makes sense, right? You're going to act in a way consistent with kind of being a B-Lab certified company or being a public benefit corporation if you're going to satisfy that mission and vice versa. What was helpful to us as a kind of additional point is like the for profit education space is enormously tainted. And I think it's tainted because people have not taken a kind of really aspirational transformative approach there. They've gone into a sector and obviously like everybody who operates in the education space cares about helping children enable them to move on. To bigger and better things, but they're kind of like local maximizers, almost they're forced to be that way. And so, you know, we had to kind of fight against that. And so it was very helpful to us to have, you know, something that stood for a kind of middle ground between maximizing shareholder value in the short term and a kind of nonprofit approach. And what I like is that, you know, ultimately, like that's what that's what any investor, it's what any entrepreneur actually wants, which is something that long term builds enormously transformative value. I think it's very consistent with kind of thinking about all your stakeholders along the way. So let me let me throw something out to the panel and this maybe I'll go a little out of the order. I said I would because you just said something that I thought was very interesting. I think, you know, everybody here at SOCAP thinks about impact investing as maybe they maybe they don't think this way. But there's a risk of thinking as it sort of as a as a sector, a kind of a kind of investment. And you said something interesting, which was that you could actually use the benefit corporation model as a differentiator, perhaps in a business that people might not otherwise think of as an impact model. I mean, have any of you sort of experienced or seen sort of value come out of the benefit corporation model by sort of standing out in a crowd that maybe doesn't otherwise look so good? I mean, I don't there's no kind of silver bullet. It's not like you call yourself a B corporation or you do the things that are on the checklist. And now, you know, all the things that you want come and everybody understands who you are. I think it's I think it's one of the things that senior arsenal to a not have to reinvent the stuff for yourself. Right. I mean, there's basically a checklist there and it says like, hey, you know what good companies do the following things. Oh, I didn't even think about that. Right. Like we we don't have to do it, but we can consider it. And second, it's the opportunity to to kind of point to something else and say, hey, if you want to learn more, you can read about it there. And it's not me telling you this. It's someone else kind of telling you this. It has a I mean, the idea of a certification goes way back to other sectors. And I definitely see this as being a certification in a very important way, which is companies that kind of behave in the way we want companies to behave. And I think that's something where especially kind of millennials, I think are going to really take this perspective of like I have a lot of choice and like me patronizing a business actually matters. And it's actually surprising today how little you can do if you want to kind of direct your dollars to something that you agree with. At the end of the day, it exclusively comes down to will people pay a premium in one way or another. But I think that the signs are positive in terms of people being willing to pay a premium for companies that like on balance are better for the world versus worse for the world. Please. Oh yeah, I was just going to add, you know, we've seen a few advantages for us. First of all, we've seen it in hiring. So I think more than just in seeing people actually come and buy product from us because of our social mission. You know, when we launched our business a year and a half ago, our first month and a half, we had like around 300 job applicants to come work for us. I had never seen that in my past businesses. And universally, the response was I want to work for a company that's working to make the world a better place. I'm willing to work for free because I want to be a part of a company like this. So we've been able to attract just amazing talent that I don't know that we could have gotten otherwise. The second thing we do see, you know, maybe people aren't coming and buying a pack or a jacket from us just because we do good in the world, but it gives them another touch point with the brand or something else they can talk about. So if they're wearing a backpack that was responsibly made, like we have this really kind of funky backpack where we use remnant materials from other outdoor brands and we give the sewers creative license to go design the bag themselves. Every single bag is unique. So if you go on the site and you order the bag, you're the only one on the planet with that exact bag. And when you're wearing that, you're going to be telling people about it. You're going to say, wow, like the sewer in this factory had creative license to design this bag. No other bag is like this. We reduced waste that would have gone to a landfill. And so it gives you a touch point and it gives you pride in the product that you have. And it lets you tell a story. At the end of the day, brands are about telling stories. And that's what I think being a benefit corporation or having these kind of values core to your brand allow people to do, allow customers to do. So any like instances where you've used the benefit corporation status, Max, in your case, the B Corp certification as well, sort of as a communications tool, whether it's with customers or workers or in the boardroom where you sort of can use it as a tool. You know, it comes up often, right? It comes up in the context of, you know, I had a community meeting in Chicago where someone just asked, like, are you a for-profit or are you a non-profit? And I say, you know, I'm a B Corp. It's kind of mostly a for-profit, but it has very interesting elements of a non-profit there. You know, it's come up. We just did a fundraising round that Brian led, but that included, you know, almost all of the new investors were folks like Mark Zuckerberg or Emerson Collective that are obviously mission-driven, are doing, you know, tremendous things on the pure philanthropy side in the ed space and who came in through something called an MRI structure. MRI or PRI is basically a way that you can kind of invest non-profit dollars in a for-profit vehicle. And there, again, it's part of the story that you can tell, which is, you know, we're a B Corp. We long-term are trying to have a transformative effect in education and it makes sense for someone who, you know, is looking for impact to say, look, this should be part of the portfolio of things I'm allocating money to. So it sounds like both of you have done fundraising with the benefit corporation status embedded and, you know, did you do some work? And it sounds like maybe you did a little bit of work framing, you know, ahead of time sort of planning to have those conversations with investors or maybe not. Maybe it just went over very smoothly. In my experience it went over pretty smoothly. Again, I think investors are just looking for entrepreneurs that are passionate about building an amazing business. And if they see that passion and if part of that involves making a business that's ethically manufacturing product or that's looking for some way to make the world a little bit better, that's just a cherry on top for the investor. Maybe we can talk to the investors exactly about, like, what they thought about us. I don't know. I think it's a great time to turn to the investors. And look, I'm interested, you know, I guess, Kirsten, you've been involved in this since Warby Parker, is that right? Yeah. So tell me a little bit about your experience and how you first heard about it and what your initial reactions were. Yeah, I mean, I think maybe two lanes of thinking about it. One, to build off of what Davis said. I think that anytime you, as an investor, are looking to partner with a founder at an early stage of a business, it's really important to have, I think it's really important to have somebody who's authentically, like, directed by the mission of the company. So not just the idea of, I want to be an entrepreneur, I want to be my own boss, I, you know, want to be the CEO, but rather is really compelled by a purpose of the company and a vision for what that is. And, you know, a lot of times I think you find some of the strongest of those traits in people that have social missions involved in their company as well. And so when Davis came to talk about his vision for Kodapaxi, things that are associated with the B Corp were just inherently part of that. They were linked together in a way that it wasn't a separate conversation. It was, you know, here's the company I want to build, here's what I want to stand for, that's how we're going to create and distribute our products, here's the stories we're going to tell our consumer. These are the things that are going to be important to us as a culture for our company. And this is the charter that aligns with that. And, you know, I think that for me, I just, I really respected that all of those things were connected and were part of building a holistic tied together mission. And being an early investor is about supporting a founder and what their vision is. So, you know, on that front. On the business front, you know, I think that, you know, a lot of early stage businesses that are being built in the commerce area in particular are really focusing heavy in on a millennial customer, so to use them as a psychographic or an archetype of a customer. You know, I think that consumer is very interested in information. They're really interested in knowing who they're doing business with. They have more access to information than any consumer has ever had in a generation. And they can ask the question, where does this product made? What is, you know, what went into it? What does this company stand for? Who's behind the company and get insight into that in a way that really wasn't, you know, necessarily readily available before? And so I think that, you know, that is information is power. It's become increasingly important. And people do want to be part of things that they align with their own values that they feel good about. And so we're really, you know, interested in brands that have the ability to speak to a customer and connect with them and things that are consistent with B Corpse tend to lend themselves to that. So I think there's really a nice fit and a synergy. And I think there's a lot of this that's not about sacrificing anything but really about playing into something that's a movement that has something that's stronger and then like an ability to emotionally connect to. Brian, what are your sort of experiences and thoughts? And remember what your sort of initial reaction was when you first heard about the benefit corporation concept? Yeah, in general, like Max said, it was a less than five minute conversation about converting to a B Corpse. I mean, one of the most amazing things that we get to do is help craft the world we want to live in. And a lot of the most important companies are not short-term focused. They're all, these things are hard. It takes a long time to build these things. So anything that helps with long, long, long-term focus works really, really well with us. You know, we're interested in being invested in and being a part of the world's most important companies and they're just not built in a day. And so the thing that attracted us most to the B Corpse status was simply, as Kirsten was saying, this is exactly how this company was being run anyway. We don't want to take a short-term profits focus. We definitely want to take a long, long, long-term profits focus. But the best thing about it is that I don't think we have to make any sacrifice or choice or distinction between maximizing long-term profits and doing insane amounts of good for society. Like, I think those things can go totally hand-in-hand. A lot of our best investments are in things that do maximum good for humanity as well as make maximum amounts of long-term profit. And I'm absolutely happy to support any structure that allows us to focus on the long-term rather than short-term maximization of profit. I meant to show whether either of you have had any discussions with your limits about the structure or whether there's any interest, you know, from your investors. I think we've had a couple, one question about it maybe, but our investors, for us, our investors know that we are not going to be short-term returns. We are going to be long-term maximized returns. And so I don't think any of our investors would be surprised with, have a problem with. I mean, they know we invest in mission-driven stuff that takes a long term. And Alt-School is a perfect example of a company that is very long-term focused will do phenomenally well long-term on both the profits and the social good front. I mean, I think consistent with that. You know, our orientation is that we want to be partnering with people who are looking to build brands, brands that are around for a long time. And part of that is, you know, you have to stand for something and connect with the consumer. So I think that that's kind of core to that thesis as well. So, so hearing a lot of very good stuff and that's good because we certainly support benefit corporations, but I don't think I'd be doing my job to the audience. If I didn't ask you to sort of bring out whether there's sort of any issues you've encountered where, and, you know, even just kind of your own legal team sort of saying, you know, why do you want to do anything different, you know, to sort of just difficulty dealing with a new standard maybe where there's not as much precedent out there. Have you run across anything where that's been difficult? It knows okay. Actually, I can speak a challenge or a tough decision that we had to make. So, you know, we'd incorporated it as a public benefit corporation. We launched the brand. And, you know, and within the first year, we started looking at like, wow, okay, we've made a promise to make a difference in the world in certain areas. We had to kind of look at like, how have we done? And as a CEO, I was really passionate about some of these areas and I was the one that was kind of running a lot of the social side of the business and where we were having impact. And I kind of, it got to the point where I realized I needed someone that was an expert in this. I don't know what I'm doing, you know, when it comes to the nonprofit world. I didn't come from the nonprofit world. It just happens to be an area that I'm really passionate about. And so we started looking at hiring someone that could actually do this. And I think it was a tough decision. I mean, I remember talking on a couple of board meetings about, you know, who's the right kind of person to hire and is it, is this really a role that we need to hire for now? And I think, I think fairly there was some, you know, some questions from the board about like, hey, you're a small business, you're a startup, you know, you can only hire X number of people. Is this really the person that's going to have the biggest impact on your brand and on your business on the growth? And it was a decision that we made together, but we ended up hiring a chief impact officer, an incredible woman that had worked for the Silicon Valley Community Foundation here, also worked for Salesforce, the Salesforce Foundation, and had like put together oracles giving strategies, just an amazing person. She moved out to Salt Lake City, Utah, where we're based. She'd never even been to Utah before. So we gave her a crash course on Utah and the outdoors, which we're right by. And so she fell in love with the brand and our mission. And she's just been an incredible addition to the team. And we can already see just in the time she's joined, how we've been able to kind of weave this impact story into our brand in a deeper and more meaningful way. Everything from product to telling the stories. And so I think for us it was a really tough decision and it's a hire we wouldn't have made had we not been a benefit corporation. But we felt an obligation to do that and so it's been great. So you have an impact function and then is there a lot of board work also around impact? You know, there's not a whole lot of board work. I mean, every two years is a benefit corporation. We have to report. And so that's actually our next board meeting. We're going to have a report that Lindsay's putting together that will present to the board. But in some ways there's not extra work because it's just woven in to what we're doing as a business. So when we're talking about like, you know, what are the products we're making? How are we making them? Where are we making them? What stories are we telling? A lot of those things are in support of things related to part of the benefit corporation tenants. And that's just how we're doing business. Matt, what do you do to sort of measure impact and you've got the same reporting requirements? Yeah, I mean the number of things that we're doing are so vast that I guess adding this one on top of it wasn't that noticeable. In particular, we have an extraordinary accounting and reporting team and it's three people who are able to give an enormous amount of transparency at like breadth and depth and with a lot of flexibility. And so it wasn't a kind of extra tax to say, okay. And again, I think part of that is the ways in which we would have impact are pretty tied to the kind of measures that we're already collecting. I mean we're in the education space so we can talk about impact to our customers. We're employing people, we're buying things from the right suppliers but all those things tie to numbers that you're already collecting. I would say that the kind of the biggest thing is probably, you know, first off I would say it has to be authentic and it has to be relevant to what you're already doing. So I think if you have an organization, you're like, oh, I'm going to do all this stuff. Oh, why not do the B labs as well? That's something I would kind of question. But again, it sounds like in our cases, and my guess is most if not all B-corps, it's kind of like, well, we would have already done those things anyway and maybe on the margins it's a small amount of change behavior. The biggest thing is it gives our employees something that they can kind of apply pressure to and say like, look, shouldn't we be doing this faster? And I have to have a good reason why we're still only operating private schools and why that plays into long-term having the most impact towards our mission. But I think it's a question that gets asked more and with a little more weight than if we weren't a B-corp, but I think more importantly if we weren't explicitly a kind of mission-driven company where I think B-lab certification should be a subset of that being a mission-driven company. I'm interested from the investor viewpoint. Maybe I'll move a little bit just out of the specifics of benefit corporation because I'm hearing a little bit of a theme that maybe there's just a value driver in impact and it's interesting because sort of as I go around the conference and I hear people talk about impact in some ways as though it's a concessionary concept. But I think what I've heard from both of you is almost the opposite. So I'm sort of interested in gesture views generally on where we are now kind of in investing and investing in impact and using that as a tool for building value. I mean, to be clear for us, there's no change here. Again, I fundamentally believe that the world's most important companies are also the ones that are going to have the most impact are also the ones that can be the most profitable. We don't need to make a distinction here. Some of our largest investments I think are pretty mission-driven companies and quite frankly from a venture economics perspective the fund we're investing out of right now is north of a billion dollars. The only companies that are going to move the needle on returns for that kind of fund are the ones that really make a huge impact on society and transcend to that next level of company. And so to me there's really no distinction between oh, do something that has impact or do something that doesn't. The only companies that actually matter to us are the ones that are going to have huge amounts of impact, whether it be in education or insurance or making humanity multi-planetary. I mean, of the companies that looking at the companies on an impact perspective what would be the differences between a company that has a B Corp status versus a company that doesn't when impact was a big part of the agenda? It's a great question. Again, since I think the most important part is the impact and the mission-driven nature and one of you guys astutely pointed out the hiring, that it makes the hiring so much easier whether it's because of the mission or because being a B Corp solidifies that mission more or makes it easier for you to run your company in a way like anything that makes it easier for you to run your company in a way that makes it so that shareholders can't sue you for not maximizing short-term profits instead of maximizing long-term. I think you want whatever structure you can build in that help enables you to focus more long-term and again, one thing that was I think pointed out if you do have that B Corp label on you, it might make hiring, it might make retention a lot easier, right? Hiring and retention is one of the biggest problems facing startups right now. But it's like if you're somebody who really believes in the mission and you've got this certification on top of it that's like, is it a B Corp? Are you really going to go to a company that doesn't have that? Do you really trust that? So there's something to be said about that, but no. I mean, I do believe that the most important part is the mission and the impact and certification is kind of a, as Mac said, like on the margins better to have than not. I'll just pick up on a point you said because we often get asked the question, you know, should we do, you know, isn't this sort of, you know, kind of on the edge and troubling because there's a lack of, say, legal precedent? And, you know, Brian, you said it best because you said, well, this is something that stops people, you know, from suing you for like not pursuing short-term value, which seems to be where the case law is or at least is headed. And what I always say to people is, well, this is better than precedent. We have written statutes in 30 states that say if somebody sues you for saying you're not pursuing this sort of short-term share value, you can say, well, we don't have to. We can build long-term durable value that's right in the statute. That's right. So that is a great thing. Anything that gives you any more legal cover to do your long, what you know is in the best interest long-term is a good thing. And the other thing we found when we talked to people is that it's a good communication device for those other stakeholders because it's one thing to sort of, you know, say we're committed but then have everybody know that you sitting on the other side of the table are a corporation governed by these sort of traditional corporate laws which do emphasize short-term share maximization value, value maximization. And it's different when you're sitting across the table from somebody who can say, well, I don't have that hanging over my head. I've got the ability to commit to you, you know, through thick and thin because we're going to come out the other end with value for everybody. And, you know, and Brian talked about like also being able to like help your growth. I mean, you look at Kickstarter, you look at Etsy, you know, these are organizations that, where it was very, very important for them to signal to their partners that over the long-term like we are going to continue to act in your interest as well. And, you know, and you look at people that build their livelihood on a marketplace like Etsy or Kickstarter and, you know, they look at some other marketplaces that came before and there's a legitimate anxiety which is like, look, at some point you're going to switch modes from, you know, building your brand and building your inventory and being supplier friendly and being the kind of partner that we'd want to now kind of twisting the knife. And, you know, that becomes kind of negatively self-fulfilling where if you're, if on Etsy the, you know, craftspeople that make things are worried that Etsy's going to be a bad place for them to sell and they stop selling then Etsy's going to go away. And so I think it's also, it's interesting to see examples there where it's almost necessary for those companies to have some kind of a commitment device where they can, they can say like, look, like you can invest in this platform because we are taking away part of our ability to basically screw you in the future when the, you know, the roles change and we have the relative power in this situation versus you. And I think that plays into like what we ultimately want to encourage is, again, over the very long-term with the repeated game of, you know, companies in our society that everyone kind of behaves and it's not insurance, right? It's not like, oh, because I'm this thing, my, my success is assured and I don't have to show up every day and work hard and get lucky. No, it's not that, but it, but I think what's important is to create an environment and it comes from many different angles, you know, it comes from the lockup of funds and it comes from legislation, but it comes from many different angles where companies can say, you know what, I can, I can actually do what I want to do and as long as I'm successful at it, I won't get the rug pulled out from under me and, and like, there's still lots that we want to change as a society, I think, to, to make that the case where people really are incented to behave in the correct manner or long-term, but it's, it's very helpful to see, you know, companies like Google or Facebook that, that have been able to operate this in, in this way because that's what, that's what ultimately has carved out the space for, you know, like, you know, top venture fund to say, actually the way that we make the most money is by investing in the organizations that, that kind of make the world as we want it to exist. Let me be clear, like, the first priority of Alt School is to the kids and to the families, not to the investors and I'll just say that if we can't, our, our first priority is to get the best education possible and if we can't figure out a way to also make that extremely profitable, that's on us, but we have, that is where our priorities are on the education side. Yeah, and it's, and, and, you know, Brian and I are from Google where, you know, again, they, they're very, very lucky in a lot of ways, but, but Google always looked at creating profit from a fraction of the value you create and that's not, you can get profits in other ways too, but I think, I think I would say, like, those are, those are crappy ways, don't get your profit that way, right? Like, you need to, you need to think about how to create just enormous value and, and then it's only reasonable that you kind of capture enough of that value to actually make it worth for all the people that took a bet on you in the first place to have done that, not least because that promotes, you know, other people to make bets on creating really transformative value in the long term and, and again, my hope is that you see more and more organizations that basically see, basically say I have no right to a profit unless I'm creating value in orders of magnitude more than the profit that I capture. I was just maybe to add to that. I mean, I think, you know, we've seen capitalism works, you know, for the most part in the world, places where capitalism exists, you know, it's lifted entire countries out of, out of poverty. I actually just got back from, from a trip to Cuba I was telling Kirsten about. I've been to North Korea, I've been to places where Brian's about to go to Cuba. Let's talk after, I'll tell you all about it. Okay, so I've been to Cuba a few times. There's these places where capitalism doesn't exist and I'll tell you what, it's not good. That said, capitalism is not perfect and the way it currently exists, there's some things that are broken and we can't rely on government, a broken government to fix those problems for us and we can look at businesses to find ways to do that, either through using their profits to do good, by using volunteerism within a company you have skills, skills-based volunteerism that you can use to make an impact in your local communities and you can also mobilize your customer base and so like one thing that we've done at Cotopaxi, we run these really cool events called questables and it's basically like these 24-hour adventure race, we actually just had one here in San Francisco a couple weekends ago, we do them all around the country you go spend 24 hours adventuring, exploring your city, spending time in the outdoors and giving service. Every time we do one of these events we end up generating like 4,000 meals that are donated by this group of customers to a local food bank. We end up doing over a thousand hours of community service in the local community. This doesn't cost us anything as a company. All we're doing is tapping into people that believe in our brand and asking them to help us make the world a better place and they want to do it because they're doing this good. They also feel a special connection with our brand and so businesses and capitalism are amazing and there's like all this untapped potential to make the world a better place through our businesses but I just think we need to start exploring ways that we can do that better. I want to pick up on one thing Matt said because it made me feel good as someone who was involved in drafting one of the benefit corporation statutes, the one in Delaware was you made the point about sitting across from the person and not having the ability to screw them later and in fact I would say it's better than that, you don't have or worse than that under the current system where you have almost a mandate because it's all about maximizing that share value and that's a legitimate claim for somebody to bring which is well, you all work together you all contributed at the beginning but now that you've got the upper hand you need to put on the squeeze and we've literally taken that out of the statute by allowing you to run your businesses as benefit corporation. Maybe you should share the story of Ben and Jerry's in Unilever, I mean I don't know how many people here know that but I bet most people don't. Well so the story of Ben and Jerry's in Unilever and I'll talk a little bit about that and then I'll talk about another similar story too because it kind of relates to B-Lab so people talk about Ben and Jerry's having to you know when they went when it was time for them to sell having to sell to the highest bidder because they had outside investors and under the corporate law that governed you know that entity your duty as a director was to sell the highest bidder this is you know corporate law wonks caught the Revlon doctrine but you don't have a choice you can't think about your workers you can't think about your supply chain you can't think about anything else they did good things they did and they ended up selling to Unilever and you know some people say that that was not you know necessarily who they would have chosen to sell the business to now let me say one thing that's interesting about the Ben and Jerry's stories is they have become it's become actually a very good story they are a certified B-Corporation owned by Unilever still and they have I was at another panel earlier today someone used the analogy of of benefit corporation being like a virus and that it infects it can infect the rest of the world some people thought that wasn't the best analogy but the idea here is that Unilever has perhaps been infected by Ben and Jerry's and Paul Pullman the CEO of Unilever is very very involved now in the big lab movement in fact like two weeks ago he put out a little video it was played at the opening of our UK office he put a video though where he said he is really looking to help move the benefit corporation movement and the B-Lab movement into the public markets and into multinationals so that public companies can take this form too and he's going to work with us on an advisory council to sort of to do that so it kind of became a good story although it had the origins of not such a good story cool story Kirsten any thoughts sort of on what you're seeing in the impact world and the investment world actually I mean I think while we were backstage you were asking me which companies have I been involved in that have the B Corp status and I mentioned Cotapaxi and Warby Parker and I was sort of finding myself thinking are there any others because actually I think we have quite a few companies that have strong missions and that run throughout their organization in different ways that might actually qualify under the status but it still feels relatively early in the movement of educating people about that and I know that's a lot about what we're doing here at this event for the next couple of days but that is really important you know I think we started we had a conversation before the panel a couple weeks ago and I admitted I said you know honestly like you know as a individual and a community member you know I like to contribute I like to find ways that I can contribute and be involved in a non-profit I'm on the board of or find a way to engage in philanthropy but when it came to Cotapaxi I actually just invested in the company because I thought it was a really strong brand story and a great leadership team and not because it was a benefit corporation it wasn't necessarily a direct positive and it certainly wasn't a negative but I guess if we start really dicing it apart you know there all the things that are connected to being a benefit corporation were the things that were really positive about the story that I really liked and I think that you know now it's come up a few times like oh as an investor in a benefit corporation let's talk about it and I was like well what does that mean is there something bad that I should have known about that I didn't know about and so that was our conversation right and the answer is no there isn't right but we still have people know that I will say at VLab we're doing a lot of work to sort of turn the conversation from really bad thing to why it's a good thing and sort of why it can really be a tool for I will just say maximizing value but not maximizing short term share value but rather maximizing sort of long term and share durable value and I see this particular certification and the Delaware structure which I think are very complimentary as being a subset of what I hope will be a kind of number of either changes or at least kind of alternative paths that become available you know I think you can look at how startups are funded and there's some real problems there in terms of investing in the kind of long term you know alternative organizations that like ultimately make a ton of money but you know in that like it's not possible to have a hundred billion dollar revenue business that doesn't have extraordinary impact on people's lives right like there's no kind of niche thing you can go do that doesn't really matter to people where people will pay you a hundred billion dollars in revenue so like size and impact are directly related and obviously as an investor you want something that ends up having tens or hundreds of billions of dollars in revenue you want curves that look like this but they're flat for a really long time and I think there are very few places like Founders Fund that have had the success where they can keep adopting that strategy it's very tough for like a new fund to adopt that strategy but I think that I would love to see kind of alternate structures for how you fund companies where you can give them you can give them more of that path I mean I look at something like Alphabet and who knows what will come out of it but gee you know that would be a big deal if you know an organization like that could plow billions of dollars into companies that are going to be very very big and by definition are going to be very very impactful and you know decent forces for humanity it's not like I don't think that those people would fund anything that is going to be some mercenary awful you know blight on the world we are and as I said we at B-Lab we're sort of starting this multinational and public markets initiative where we're going to sort of take the next year or two to really take a very hard look at sort of scaling the movement into the public markets because that's a place that you can really get you know number one scale and number two permanent capital I mean because you know Brian even your funds have a life and you know the public markets in theory although they've gone in a direction with sort of the stock buybacks and the round and round in the day where it's not so permanent but in theory it's a place to really get permanent capital behind exactly this kind of organization so people are interested in that that is definitely a place that we're trying to take the movement do you guys have any questions for me so I moved back to the U.S. a year and a half ago and when I moved to Utah where I felt was the best place for us to start this outdoor brand and public benefit corporations didn't exist there and so I was able to play a small role in that process I went to the state senate and house and testified there and kind of worked with some of the work that had already been done and it was really impactful but what are some of the biggest challenges you guys are seeing there's 20 states or so that are still left what are the obstacles that you guys are trying to get over why hasn't that happened in all 50 states yet so I can tell you this story like from my perspective because I was one of the big in my old career I was one of the biggest obstacles because I spent 26 years practicing corporate law and I thought that corporate lawyers had it all figured out and that the social function of corporations was to make profits and then those profits could be plowed back into other things and we didn't need to change the law and that attitude which the bar had in Delaware isn't really that different from the bar or at least the corporate bar across the country and in most states the corporate law although the legislature has the theoretical obligation to draft it and send it on to their governor and get it signed for the most part it's really the state bar association that sort of covered the corporate law and so really it's been a matter of going state by state and dealing with the bar association and the legislatures and getting it passed we've been quite successful and that we're in 30 states in the District of Columbia at least 20 states to go and I think we are still working on that I would say that we feel we feel pretty good about having the 31 jurisdictions because it includes Delaware it includes California it includes Oregon it includes a lot of significant states so that a lot of the and Delaware was obviously important because still for the most part people use Delaware for the public markets and even outside of Delaware people will use Delaware for their private companies because they're comfortable so there's a tool really whatever state your company is in you can always under the federal system here you can always use another state's law of incorporation so we're continuing to work with bar associations and we hope to get that covered but as an organization we've kind of gone to the next level we used to have a policy group that was focused on that we think we've made enough progress where we actually have a group now and that's what I do, I'm in the mission alignment group and we're focused now we've put a focus on working with companies that are thinking about going through the process and who perhaps it's not as easy for them as it might have been for the two of you and their investors have questions their lawyers have questions and we're working with them we're also spending a lot of time working with public market players so we've been visiting organizations like CalPERS and CalSTRS BlackRock Fidelity you name it all the big institutions that own the bulk of stock in the public markets and trying to work with them to get them comfortable so when they see IPOs like the Laureate IPO I mentioned earlier they'll be comfortable and they'll understand all the things that we're talking about because for the most part when you have a fund like CalPERS it is a long term investor I mean they're actually very forward looking on ES and G type issues and we feel very good by the way the reaction we're getting is very positive we don't see a lot of difficult issues we've talked to some of the regulators like the SEC they'll be disclosure dealing with it like you probably had in your documents I mean how many public companies are there that are B-Corps so in the public markets right now there is one company that is a certified B-Corporation and is also a benefit corporation under its what's the equivalent of a benefit corporation a company that's called Nitora they're a multi-billion dollar market capital and they're listed in the US exchange they're not listed on the US exchange but they have global well known investors like Tiro Price, Lazard and all those investors in July voted for this so in other words they sort of wanted to get the BLAB certification which requires the legal change and they went to their stockholders and they asked for the vote and they got it so that's the best example Etsy is certified by BLAB they haven't made the legal change yet but I will say at the time they went public they went public as a Delaware corporation and our statute had some provisions that made it sort of difficult to use as a public company some very high votes and appraisal rights under certain circumstances and we fixed those so we sort of cleared that path I mean what sort of a postmortem was done on that process to understand like did it impact their interactions with the public market investors so you know I have not spoken to them directly but my understanding from sort of the limited discussions that you know this is sort of second hand but investment bankers have sort of told us that there's no it's not unlike what both of you said at the venture stage that it's not really going to have an impact on valuation what they're going to look at is the the business model they're going to look at the management when I talk to people at places like CalPERS they say well we care about governance issues and what's in the charter but not this issue we care about whether there's a staggered board all sort of take over things that public market investors care about so I feel very good that as people do this the public markets are going to be very open to it in the same way I mean there might be a learning curve but once you get through that any audience questions do we have time for audience questions yeah any hey I'm Ryan Honeyman I wrote the book on certified B corporations so this is a great topic for me you mean literally right so my question hypothetical so I'm thinking of starting a benefit corp accelerator because one of the challenges is I think adding the benefit corp structure later and so I think there's an opportunity to accelerate companies from the start with the benefit corp and certification framework but I guess for the funders for Brian and Kirsten you know for your limited partners if you have a 10 year fund and say a company through the accelerator saying I don't ever want to go public you know how do you actually make money because I think that's part of my disconnect a little bit is if people take the benefit corp structure and say we're not going to go public in seven years how do you get your money back you have to get liquidity through other means and there's other ways of getting liquidity rather than just being a public company and we've started to work with other types of permanent capital companies that are going to grow in value over time but maybe not go public but yeah at the end of the day after 10 years plus three years I guess we at some point do have to get liquidity but again there's other ways then going public to do that I'll say one great thing to read is Fred Wilson's blog on Kickstarter's adoption of benefit corp and how they were getting a return on that investment Hi my name is Chris Theodore I publish the Reader magazine in California and we're a certified B Corp benefit corporation and I have a commendation recommendation and an introduction the commendation is for you Greg for what you said about being interested in being invested in the world's most important companies I think that really is cool because it sets the bar really high and it familiarizes people as to what is capable of even with the benefit corporation structure and then the recommendation I have I'm guessing a lot of people are entrepreneurs here and I just got back from Singapore at the Milken Asia summit and it was it was filled with people and I met private equity people but it feels much safer here in terms of aligning myself with investors who are mission aligned actually that's all I wanted to say okay thanks Hi my name is Jens Molback I'm with winwin.care I'm enjoying the conversation I'm curious can you take a B corporation structure and apply it to a partnership and can you apply that to actual investment funds are there such things as B funds and would limited partners be interested in those you can absolutely use other alternative entities other than corporations in fact in most US jurisdictions if you're formed as an LLC or a limited partnership you just don't need the benefit corporation change because there are provisions in the statutes that authorize those entities that permit you to alter fiduciary duties and so like at B lab for example we would say in order to be certified you need to meet legal standards and then you need to meet the legal standard so if you're a corporation you need to use benefit corporation status but if you're an LLC you can just write it into your agreement we have certified funds Hi Hi I'm Leona and I'm the founder of Catalysted we are a New Orleans based public benefit corporation working in education when we incorporated as a public benefit corporation a few months ago one of the things that lawyers and other such people were a little bit concerned about was that because the public benefit corporation structure was not tested in courts it was likely to add significant risk both to us as an organization in terms of being sued by stakeholders who who may believe that we haven't met our other commitments so we still believe that despite that risk it was still worth it so my question to you is first of all is that a legitimate risk and how should we as B Corps think about it and secondly as an organization that's working in an ecosystem that has very very few B corporations how do we convince investors that that's not something to worry about I'll tack on to that have you considered like a legal defense fund for B Corps let me answer the legal question the statutes I'll talk about the Delaware statutes but the other statutes are similar but the statutes are very carefully drafted to limit the ability of stockholders to bring claims just for instance I'm sorry to limit the ability of anyone to bring claims because they're written in the first place to say those other constituencies people who are affected do not have the right to bring a lawsuit only stockholders can bring lawsuits to force because they still own the company it's just that the idea of the company and the value proposition that they're buying into is one where you're building durable value but the claim is still theirs and thinking about the public markets and how there's sort of a plaintiff's bar out there we wrote in some minimum ownership requirements so the only people who could bring these suits were people who really had skin in the game so for example in Delaware you have to own at least 2% of the company then we also very carefully wrote into the statute what's called the business judgment rule so and that applies to traditional corporations to say basically if you don't like what the board is doing and you think they breach their fiduciary duty you can't just sue them and say bad decision you have to show that they were conflicted or that they were acting in bad faith and we wrote that in here too to show that a board made a bad balancing decision you can't just say you favored this constituency too much you just have to say nobody would have done that and I think our time is up but I could talk to you more if I can add just one thing just to wrap things up we can all use your help I mean everyone here we need your help in educating people about benefit corporations also in supporting companies that are B-Corps or benefit corporations telling people about art school, about Cotopaxi about other companies that are doing things right and if anyone here wants to talk after and wants to make some cool Cotopaxi gear you know jackets or satchels bags I'm your man come talk to me after like that thank you very much great audience