Starting a NY Benefit Corporation
We formed Good People as a New York Benefit Corporation or B Corp. It’s a relatively new corporate form championed by B Labs that specifically provides for companies committed to a general public benefit in addition to creating value for shareholders. The big idea is that all stakeholders matter and shareholders’ desire for a financial return shouldn’t be put ahead of the business’s broader purpose and commitment to its customers, employees, and community, as well as sustainability and the environment.
Forming a B Corp in NY is easy. It’s the same process and fee as setting up a normal corporation (C Corp or S Corp), with a few tweaks to the initial paperwork. The By Laws and other internal documentation don’t need to be a lot different either.
The real challenge is two-fold, defining your commitment to general public benefit and figuring out how you are going to measure and report on your performance. All well run companies keep accurate books and report on their financials (at least to internal stakeholders). Measuring your commitment to total stakeholder value is a bit trickier.
In case you’re curious, the legal standards for benefit corporations are pretty straightforward. You need to choose a third party standard for measuring your public benefit and you need to file and make public an annual report on how you are doing against that standard. It turns out there are actually a lot of different standards available, including some that are specific to environmental concerns or specific industries. But B Labs B Corp certification process seems to be the current gold standard, so that’s what we are planning to go with.
Energy Savings are Good
I’m sure our vision for how we are going to serve the public good will evolve over time, but we are starting with a core purpose and first product that make it pretty straightforward. We sell an energy-saving product, an adaptive fan controller for small HVAC systems. It typically saves 15-30% of the energy used by HVAC systems and pays for itself in 3-5 years (without any government incentives, which we are working on developing). It’s a win for the customer and the environment. In addition to tracking our units sold, we are hoping to help our customers measure actual energy and dollars saved so that we can track and report on that too.
A NY Supply Chain is Good
The company we are licensing the technology from has most recently been sourcing product from China. But there is no reason that small electronics manufacturers in NY couldn’t make the product for us. Buying local is a good way to share the prosperity and build stronger communities. It also reduces transportation waste. Today we had an amazing meeting that suggests we might be able to source at least some of our products through one of our area ARCs and give people with disabilities a chance at some meaningful work too.
Self-Management is Good
We want to be a great place to work. We are big believers that everyone is capable of creativity, learning, and accountability. Independence and decision-making are what makes work fulfilling and helps us bring our best skills to bear. So, we are embracing self-management and a truly flat organization. Obviously, this is really easy with two co-founders as the only employees, but our plan is to hire and grow with the same philosophy of empowerment to let every employee unleash their inner entrepreneur. It will be an adventure developing the transparency, systems, and culture to make this work as we grow, but we’re really looking forward to it.
Giving Back is Good
The plan is to give back in several ways. First, we are going to give back to our people with profit sharing for all. Next, because our energy-saving product is central to our mission, we are also going to give some product away to schools and small non-profits that might not otherwise be able to afford them. Our current target it to give one away for every twenty sold. We will also give in other ways to support communities and causes our people care about. Finally, we will provide a reasonable return to our shareholders for their willingness to entrust us with their resources.
We don’t really know where that will put us in the grand-scheme of benefit corporations, but it seems like a good start.