M2 - U2 - Class 22 - B Corps Flashcards
Certified B Corporations
B stands for benefit
Started as a non-profit organization
Not a government agency - no legal status
Etsy: Certified B Corp (2012-2017)
Small businesses art and jewelry
Easier to customize
Went public and had rapid growth (IPO)
CEO interview
Value driven company
3.5% of profit taken per sale
Goal to Connects customer to the creator(seller)
High purpose that will last
Should be B corp for recr
I’m just allergic to capitalism - Discussion questions (ARTICLE)
Consider three groups at Etsy: shareholders, employees, and customers. Are their interests aligned?
Shareholders -
Want more money/return on investment
Customers (bought and sold) -
Buyers and sellers….
Buyers want unique products and sellers want to keep scale small (not like Amazon) as merchants grow, you want to hire more people and contract but how does that fit into Etsy’s mission of supporting small businesses
Employees -
Etsy employees are in an open/inclusive environment
Very disturbed my company’s decision to change
Their interests may be misaligned shareholders vs stakeholders
Why was Black-and-White Capital dissatisfied?
Black-and-White Capital noted that Etsy’s insistence on running its
own servers rather than using cloud-based services and software
offered bycompanies such as Google and Amazon—an emphasis
that was known, under Dickerson, as “code ascraft”—and its
“horrendous search functionality” had hampered the site’s growth,
leaving it“drastically under-monetized.” (From article)
Why was Chad Dickerson fired?
The board was under pressure and fired him because of the fear of takeover
Wunder went public, releasing the letters on the web and publishing a press release that accused Dickerson and the board of overspending and of failing to take investors’ concerns seriously. It suggested that Etsy drastically cut costs and remove Dickerson as chairman, often a precursor to firing a CEO. It also suggested that Etsy “begin evaluating any and all strategic alternatives for creating shareholder value,” or, in English, consider selling itself.
Hours later, Etsy announced that it was laying off 80 employees—about 8 percent of its staff—and that Dickerson had been fired by the board
Do you think Dickerson was mismanaging the company, or do you think the activist investors were ruining the company’s distinct culture and strategy?
Wasn’t ready to deal with investors and keep values so why go public and get big? They become more rich and visible but the downside is scrutiny and criticism.
Is Etsy still a B Corp? What happened?
No lost it in 2017
B Corporation
B Corporation
Certified by B Lab (independent non-profit, non-governmental organization)
As long as you meet this criteria then you get this certification (not by government)
Most B Corps are privately held (exceptions: Laureate Education, Lemonade, and Warby Parker)
If incorporated in states with public benefit corporation laws, must become a public benefit corporation (PBC)
Etsy falls into this category
Obligation to convert legal status to PBC
public benefit corporation (PBC)
Legal status available in 36 states and DC
Different from traditional C-corporation
Different from non-profits
Directors must consider non-financial interest of stakeholders
Just because you are a B corp doesn’t mean
you have to be a publicly traded company
What are the differences between a B Corp and a public benefit corporation?
B corp has nothing to do with government but when you become a publicly traded company PBC which is a legal status provided by the government - obligation to benefit stakeholders
B Lab charges certification fees up to $50,000 per year. Is the B Lab’s certification of B Corps ethically justifiable?
Apply ethical theories
Why are there so few B Corps that are publicly traded?
Investors might not want that expense.. What is there for me?
You get benefits like PR and bragging rights though.
Senator Elizabeth Warren proposed legislation to require all corporations with more than $1 billion in revenue to become public benefit corporations. Is this ethically justifiable?
Under Nozick’s right theory, no.
Under Rawls’ justice theory, yes.
I personally believe yea.
