The Kickstarter PBC Annual Report
Our portfolio company Kickstarter became a Public Benefit Corporation in the fall of 2015. I blogged about it at the time. A Public Benefit Corporation (PBC) is a specific type of corporation that allows for public benefit to be a charter purpose in addition to the traditional corporate goal of maximizing profit for shareholders (from Wikipedia).
One of the requirements of being a PBC is that you publish an Annual Benefit Statement after each full year as a PBC. Kickstarter published its first Annual Benefit Statement yesterday. You can read it here.
Here are some bits from the statement:
- Our CEO’s total compensation in 2016 was 5.52x the median comp of all non-CEO, non-founder employees in 2016. A 2015 study by Glassdoor found that the average CEO earns 204x the median total worker compensation.
- As of December 31, 2016, our team was majority women (53%), as was 61% of our Senior Team and half of our Executive Team.
- 100% of our interns in 2016 joined us from New York-based organizations fighting inequality: Coalition for Queens, Prep for Prep, Ladders for Leaders, Tech Talent Pipeline, and ScriptED.
- We donated 5% of our after-tax profits to six organizations working to build a more creative and equitable world.
- We took advantage of two tax credits in 2016 and paid a combined effective tax rate of 25%.
I would encourage you all to read the entire statement. It stayed with me all day yesterday. I am proud to be a Director and investor in Kickstarter which is showing the world that you don’t need to choose between making money and doing right. You can do both at the same time.
Comments (Archived):
What’s the logical liquidity event for a VC that has a PBC in its portfolio?
A PBC can go public or sell itself just like any other company.http://benefitcorp.net/faqCan benefit corporations go public? Yes, the benefit corporation form was designed to protect the mission of a company when it goes public. There are currently no public benefit corporations. However, in October 2015 Laureate Education, the largest degree-granting higher education institution in the world, announced that it was filing an S-1, and that it would do so as a benefit corporation.I am noting also that a PBC quite possibly has a lower employee cost structure than a traditional corporation as a result of the types of people that they attract to work there. Employees that could possibly be willing to take a lower compensation for feeling they are part of a company with a social missions (similar to non profits). As a result it could be potentially even more profitable than a traditional corporation doing the same exact thing. A version of this is already happening in other types of businesses with psychic income non monetary compensation.With Kickstarter this paragraph tells it all:Our CEO’s total compensation in 2016 was 5.52x the median comp of all non-CEO, non-founder employees in 2016. A 2015 study by Glassdoor found that the average CEO earns 204x the median total worker compensation.To me this means this could also impact salaries down the line from CEO even though the ratio seems to imply the opposite.
PB Corporations show that companies are humans and have a heart, not just legs to run profits.
We need more heart in all systems, including in the algorithms themselves. The PBC structure’s a great one and an example of what sets the US apart for startups.We need to get from autistic-indifferent systems to empathic ones:* https://medium.com/startup-…https://uploads.disquscdn.c…It’s not straightforward. The entire paradigm of AI and what SV believes in — which is AI is about efficiency objectives, correlating data faster and risk reduction with logic, mechanics, applied probability & stats — would have to change.Plus we’d need whole new datasets and algorithms to train the AI on empathic decisions and behavior.
Is 204x (CEO to total median worker comp) the average for all types of companies? Or is it specifically for specific types of businesses (public, private, etc.)?
What a gorgeously-designed report.
Wow! this is very impressive and inspiring. Thanks for the share.
From the report:Kickstarter will not lobby or campaign for public policies unless they align with its mission and values, regardless of possible economic benefits to the companySo this is pretty cool:We filed a public comment in support of the Department of Homeland Security’s proposed International Entrepreneurs Rule, a proposed regulation that, in the face of congressional inaction on immigration reform, would make it easier for creators and entrepreneurs to come to the US and pursue their ventures. Last month the final rule was published, incorporating our suggestion that a person’s success on a platform like Kickstarter can be used as evidence to support their application to come to the US.
But I thought Kickstarter was US-only? IIRC I checked when Fred first blogged about them here, and that is what I heard / read then. Ditto for WorkMarket, also an AVC portfolio company.
Key part:would make it easier for creators and entrepreneurs to come to the US and pursue their ventures
Yes, I get that, but I think you did not get my question (unless I am missing something):>incorporating our suggestion that a person’s success on a platform like Kickstarter can be used as evidence to support their application to come to the US.So by my earlier question, I meant, how can they use their success on Kickstarter as evidence to support their application to come to the US, when, while they are in their own country (abroad), they cannot use Kickstarter at all – because it is US-only?
Actually from this:https://www.kickstarter.com…Project creation is currently available to individuals in the US, UK, Canada, Australia, New Zealand, the Netherlands, Denmark, Ireland, Norway, Sweden, Germany, France, Spain, Italy, Austria, Belgium, Switzerland, Luxembourg, Hong Kong, Singapore, and Mexico who meet the requirements below
Ok, thanks, got it. Had not checked their site recently.
How did kickstarter achieved their impressive male to female employee ratio? It’s great insight to know how many are female engineers. Also, what diversity initiatives are in place to help keep this balance? Definite learning points there
I am always asked “Do you want to make money or change the world – because you can’t have both” and it bothers me every time that it’s viewed as a binary choice. Good for Kickstarter!
Like to see a blind disclosure of where the employees went for their higher education. an elite bunch?
I think this makes total sense, with the exception of the CEO pay ratio.The median employee had better not have 1/5 the ability of the CEO to create performance and the CEO had really, really really better not see him/her-self as having only 5x the responsibility of the median employee.The world is so focused on being equitable to the median, that it is wildly unfair to the people who bear the largest burdens of responsibility. As someone who is married to an executive leading 3500 people (most of whom define a really bad day as ‘someone died’), this really sticks in my craw.Responsibility should be compensated appropriately.On top of which, here in my soon to be ex-homeland of Alberta, both the provincial and federal governments feel that these people should carry an even higher tax burden.If Albert is right and we are about to or have entered a time when capital is in abundance, then people who manage capital should be paid far less, as their responsibility is diminished, relative to the past. This would apply to Kickstarter, obviously.And, governments should tax capital based profits (i.e., interest income or fees for placing capital), not income earners, disproportionately.
I’m curious if this accounts for shares in the company.Edit: it says “Including both salary and equity, our CEO’s total compensation equaled 5.52x the median total compensation of all non-CEO, non-founder employees in 2016.”
Total comp usually means salary, benefits & stock.
Yup yup. I agree with you though regarding the responsibility and reward.
Good job, Kickstarter.
I love the PBC idea! Was super excited to hear about it last year, and will dig into this cool looking report.Does being a VC i.e. funding companies that creates jobs, automatically make you a potential PBC?
Kickstarter is by far my favorite company in the world. Not even close.