Public benefit corporations are on the rise. Public benefit corporations include considerations beyond shareholder returns in their governing documents, putting values on par with financial objectives. Among the latest is Ello, all the buzz among social network watchers. Unlike its rivals, Ello has said that it will not take advertising and will not mine user data. The company plans to make money by selling apps and widgets that users will install. In a few short months, Ello sprouted from 90 users to 1 million in just a few months. Now joining requires an invitation as the company works to handle the explosive growth (full disclosure: this writer’s invitation is among the three million or so still pending).
Benefit corporation legal status is available in many but not all states. Alternatively, B Lab offers a practice assessment for companies in all jurisdictions that can result in B Corp certification. B Corp certification demonstrates a public commitment to a multi-stakeholder approach to business. Well-known B Corps include apparel retailer Patagonia, ice cream maker Ben & Jerry’s, and the Center for Higher Ambition Leadership member Cascade Engineering.
In Ello’s case, even a buyer of the company will be required to abide by the covenants that the founders have enshrined in their benefit corporation declaration. In an article in the New York Times:
“It basically means no investor can force us to take a really good financial deal if it forces us to take advertising,” Paul Budnitz, a co-founder of Ello and its chief executive, said by telephone. “It points us in the right direction, and it protects us.”
Will Ello succeed? No one can say at this point. We don’t pick winners and losers but we do applaud companies that embrace a larger social mission and responsibility alongside the pursuit of profitability. This is the essence of higher ambition.