WIRED editor David Rowan caught up with Kickstarter cofounder Yancey Strickler, about the unicorn's decision to become a public benefit corporation in Delaware.
Yancey tells Rowan that from the very beginning, Kickstarter vowed to never sell the company, to never go public, but rather to preserve the company as a space that can exist in a strong creative economy where things can happen.
'A few years ago, we became aware of this legal definition of public benefit corporation which means that if you re-incorporate and it requires 90% of outstanding shares as approvable to do, it creates a mandate for you to consider positive impact on society equally with your own sustainability. So it sets a higher bar and a multiple bottom line for you as a company.
'We believe that a universe only driven by profit maximisation can be poisonous to culture, especially its important that there's a diversity of models and concepts about as to how an entrepreneur can operate,' he says.
'It just lays it out for us what it is to truly be a conscientious company thinking of the public good,' Strickler says.
To hold itself accountable to living up to those standards, it'll post its progress online from February 2017.
But it's not looking to 'shame' other larger corporations who do employ those tactics.
'What I think about, is we believe deeply in the responsibility we have to others and feel so fortunate to be where we are and remember what brought us here.
'Every giant corporation started as a small company, but at some point they lost their soul. I don't know when that is but by doing a move like this it's putting your idealism in amber at the beginning and making sure it's always part of the company,' the Kickstarter cofounder says.
'We have been a profitable company for five years, when you do that you can preserve your independence. We are in a position based on having a strong model at the core of our business but we want to create another path for entrepreneurs starting something now who feel similarly idealistic.
'They shouldn't be forced to put aside strong beliefs just to get that cheque. The world would be a whole lot better if new ideas could go and have a chance to survive; that's more important than us personally,' Strickler added.
If the company does well, the stakeholders do well and vice versa. This means it's constantly aligned to the performance of the business and how well it's serving customer needs.
'It shouldn't be that everyone gets rich and stops caring and is shopping for boats all day,' he adds.
'About five months after we launched we raised a small round of funding. They've [the investors] always been nothing but supportive. We told them from the beginning that we're idealists, we know how we want to do this and want to all be on same page about this or else it's going to suck and everyone agreed,' he said.
Strickler said he believes this is 'worth fighting' for the creation of a more diverse culture.
Because of this ethos, the platform has allowed independent artists and creators to make things they're excited about just because they're excited about them.
'If you think about the traditional means of funding films, albums and companies, whatever, it's always through the lens of investment. But most of great ideas in life have no interest in money; they just want to exist. You would see artists contorting idea to try create a profit outcome, what we have done is created a place where work can exist just because people are excited for it too it doesn't need a profit justification,' Strickler explains.
'Projects that do the best are where there's a community around them to bring something to life and it's when backers are really part of that process,' he says.
'And just have patience. So much of the zeitgeist about business and startups is: 'Be more aggressive then the next guy, be paranoid.' It's all wrong. Being patient, thoughtful, creative, trying to make the right decisions, that matters and is the right thing to do. Don't succumb to the pressure and just believe it's easier in the long run, I promise,' the Kickstarter cofounder advises.
Yancey tells Rowan that from the very beginning, Kickstarter vowed to never sell the company, to never go public, but rather to preserve the company as a space that can exist in a strong creative economy where things can happen.
'A few years ago, we became aware of this legal definition of public benefit corporation which means that if you re-incorporate and it requires 90% of outstanding shares as approvable to do, it creates a mandate for you to consider positive impact on society equally with your own sustainability. So it sets a higher bar and a multiple bottom line for you as a company.
'We believe that a universe only driven by profit maximisation can be poisonous to culture, especially its important that there's a diversity of models and concepts about as to how an entrepreneur can operate,' he says.
Live by your values
After the move, Kickstarter drafted a charter which is on its website and lists around 12 commitments they have made including supporting artists and the environments they live in, and donating 5% of profits each year to help arts music education and fight systemic inequality. They've also pledged not to use tax avoidance strategies or sell user data.'It just lays it out for us what it is to truly be a conscientious company thinking of the public good,' Strickler says.
To hold itself accountable to living up to those standards, it'll post its progress online from February 2017.
But it's not looking to 'shame' other larger corporations who do employ those tactics.
'What I think about, is we believe deeply in the responsibility we have to others and feel so fortunate to be where we are and remember what brought us here.
'Every giant corporation started as a small company, but at some point they lost their soul. I don't know when that is but by doing a move like this it's putting your idealism in amber at the beginning and making sure it's always part of the company,' the Kickstarter cofounder says.
A new business model
Strickler says he wants to bring about a change in the world of tech and startups; it doesn't have to be all about valuations and growth rates, you can stick to your values and be profitable without selling out.'We have been a profitable company for five years, when you do that you can preserve your independence. We are in a position based on having a strong model at the core of our business but we want to create another path for entrepreneurs starting something now who feel similarly idealistic.
'They shouldn't be forced to put aside strong beliefs just to get that cheque. The world would be a whole lot better if new ideas could go and have a chance to survive; that's more important than us personally,' Strickler added.
Company culture is important
Strickler says he's very clear at the outset that being an option holder for new Kickstarter recruits isn't that 'one in a million lottery ticket'.If the company does well, the stakeholders do well and vice versa. This means it's constantly aligned to the performance of the business and how well it's serving customer needs.
'It shouldn't be that everyone gets rich and stops caring and is shopping for boats all day,' he adds.
The right kind of investors
Equally you don't have to sell out to investors. Strickler says its investors and stakeholders were supportive of the company's decision to become a public benefit corporation and no one voted against it.'About five months after we launched we raised a small round of funding. They've [the investors] always been nothing but supportive. We told them from the beginning that we're idealists, we know how we want to do this and want to all be on same page about this or else it's going to suck and everyone agreed,' he said.
On being counter culture
In the handbooks new employees get at Kickstarter is a section called 'f**k the monoculture'. This, according to Strickler is the 'same, same; the world that's created when the world is being optimised for money. This is a world of chains and banks and every top 40 hit being made by the same four people,' he says.Strickler said he believes this is 'worth fighting' for the creation of a more diverse culture.
Because of this ethos, the platform has allowed independent artists and creators to make things they're excited about just because they're excited about them.
'If you think about the traditional means of funding films, albums and companies, whatever, it's always through the lens of investment. But most of great ideas in life have no interest in money; they just want to exist. You would see artists contorting idea to try create a profit outcome, what we have done is created a place where work can exist just because people are excited for it too it doesn't need a profit justification,' Strickler explains.
How Kickstarter projects thrive
The success of projects varies by category, Strickler says, and the tech section is where you'll see the biggest funding projects. However, this also has the lowest funding success rate.'Projects that do the best are where there's a community around them to bring something to life and it's when backers are really part of that process,' he says.
Kickstarter's startup advice
'I would say don't sell out. Don't sell out your values, don't sell out your community, don't sell out the long term for the short term. Be idealistic; really be clear about the things that drive you, remember the lessons as to how you were taught how to treat people and build them into your company operations. Act with integrity always.'And just have patience. So much of the zeitgeist about business and startups is: 'Be more aggressive then the next guy, be paranoid.' It's all wrong. Being patient, thoughtful, creative, trying to make the right decisions, that matters and is the right thing to do. Don't succumb to the pressure and just believe it's easier in the long run, I promise,' the Kickstarter cofounder advises.
