In search of the benefit corporation, Part II
My journey in search of the benefit corporation officially began at the SoCap10 (Social Capital Markets 2010) Conference in San Francisco. During my visit, I had the good fortune of meeting with friendly folks at four benefit corporations (or B Corps) in the Bay Area, including Driptech, Alter-Eco Americas, Sungevity, and CleanFish.
It was a fascinating adventure into the world of fair trade foods, remote solar design and installation, sustainable artisan seafood, and affordable drip irrigation guided by a remarkable group of entrepreneurs. They were kindly willing to share their business models (aka “the secret sauce”), guide me through their operations, and discuss their philosophy, origins and future plans. Unsurprisingly, they weren’t just about coffee, sun, fish, and water.
This post will offer some insight into their ventures, identify commonalities between them, and pose questions that arose following the discussions.
I waded my way through the ever-buzzing crowd at SoCap to meet with Peter Frykman, CEO and Founder of Driptech, and one of America’s most promising social entrepreneurs. Based in Palo Alto, California, the company manufactures affordable drip irrigation for small-plot farmers in developing countries (particularly China and India) as a means of alleviating poverty. The kit costs roughly $300 for a one acre farm, or one-fifth the cost of traditional systems. Peter’s calmly stated goal: one million farms using drip irrigation in the developing world within five years. This is not a man that could be accused of hyperbole. He’s clearly sharp and practical. What started as a relatively simple idea for a Stanford mechanical engineer turned entrepreneur may change lives for a million families in a very short time.
After an engaging conversation with Peter, I wandered over to the bustling vendor booths at SoCap to chat with Wes Selke from Good Capital, Chairman of the Board for Alter Eco Americas. Based in San Francisco, but with partnership operations in Paris, Rio and Sydney, Alter Eco Americas is an importer, wholesaler and brand owner of a broad range of Fair Trade, Organic and Carbon Neutral products including chocolate, rice, sugar, olive oil and quinoia. Their goal is to gradually close the gap between rich and poor, so-called developing and industrialized countries. You can find their tasty products all across North America (with exceptions including Ontario) at natural food stores and places like Whole Foods.
Following the SoCap conference, I made my way early in the morning across the Bay via BART and the local bus to the sunny orange Oakland office for Sungevity to meet with Bill Stark, Marketing Manager and solar evangelist. They are in the innovative business of remote solar design, installation, and leasing of systems, serving customers in California, Arizona, and Colorado. Their vision is to bring affordable, clean solar energy to as many homes as possible. The extraordinary and seamless structure of their front and back office operations, from marketing and system design to contractor management and customer care makes the business run like a supercharged solar-powered machine.
After a brief respite and checking into my new, thrifty, and neat accommodations, it was a brisk walk through the streets of San Francisco to meet with Tim O’Shea, Founder and CEO of Cleanfish. The company is a broker and marketer for sustainable, artisan seafood for the North American market, featuring products from Texas Redfish to Wild Nunavut Arctic Char. Tim’s vision is clear: a global sustainable seafood system, decreased reliance on industrial fisheries and ultimately, a revitalized ocean ecosystem (allowing the oceans to rest). Our vast ranging conversation revealed his passionate commitment to this vision, as an individual enterprise and a catalyst for a broader sustainable seafood industry through the newly created CleanSource, LP Fund.
There were a number of interesting commonalities with each of these companies:
- Young firms with track records. All of the companies were relatively new enterprises that began their operations between 2004 and 2008. Despite their relative youth, they were all relatively mature firms with successful business operations, proven revenues, and marketable products that have been broadly accepted by consumers.
- Remarkable growth. Although actual revenues are not publicly available, it is safe to say that these ventures are experiencing double digit revenue growth.
- Commitment to mission. The B Corporation social mission standard is not a gimmick, it’s a functional component of the DNA of these companies. They didn’t change their mission to become a B Corp, they were benefit corporations with a defined social mission right from start-up.
- Commitment to quality. It is an interesting characteristic of sustainable businesses in Canada, and evidently, of benefit corporations in the US: they want to provide the best quality product or service possible. They don’t want to be seen as “soft” businesses, but as a higher quality and cost competitive alternative to the mainstream.
- Balance between people, planet and profits. These companies strive to balance people, planet, and profits, each with relatively equal weight. Make no mistake, these are American companies, so they are looking to make money.
- Movementarians. The ventures are a fascinating, dynamic combination of enterprise and activism that extends beyond the bounds of their business. From CleanFish’s campaign/philosophy of “Vote with your fork” to Sungevity’s successful Put Solar on the White House campaign to the goal of one million farms with affordable drip irrigation, these companies seem to manifest an enterprising movement with noble aims and a clear means to achieve their goal. They are also part of a broader movement, described by one leader as a shared identity with enterprises that are, “…transitioning to a sustainable economy with meaningful wealth creation that mandates the triple bottom line in business.”
- More than just employees. Perhaps as a result of the appeal of being a part of a broader movement, or the convincing nature of their leaders (ie. “I came because of Bill.”), folks seemed to be choosing to work at these ventures because of a vocational attraction, similar to the draw for non-profits, public service, or even major professions.
One of the key questions that I asked myself after the visits was: are these benefit corporations by nature of their own business or is it a function of their business sector? In other words, could any fair trade, solar, seafood, or water company be classified as a benefit corporation? Upon reflection, a comparison of their business to other’s in their sector, and careful review of the multi-factoral B Corp accreditation process, the early conclusion would be that they are a unique breed of business defined not by their sector, but by their own unique products, mission, and people.
So what’s next?
It would seem that the next and necessary major leap that these types of enterprises need to take is a simple and ongoing demonstration of their positive social and environmental impact at a local or global level. There is clear proof that they have met a standard for sustainable and beneficial practices. Beyond the bottom line, it is vital for the collective narrative and future progress that these companies chart and report their quantitative and qualitative impact. For example, how many farmers are using affordable drip irrigation, and how has the product helped improved quality of life? I would love to watch their progress as they head towards a million farms and see the change in quality of life they drive alongside small farm partners around the world. Fundamentally, if it is an enterprising movement, what progress is being made towards poverty alleviation, just labour practices, climate change, and sustainable oceans?
More to come in a few weeks after a visit with legislators in Maryland and New York to chat about benefit corporation legislation…