Kickstarter re-incorporates as a "public benefit corporation"

By reforming as a special purpose company, they are able to escape the cult of fiduciary duty that insists that management must screw people over whenever it will enhance shareholder value; they are legally able to put people before profits.

Part of the new deal is that they have pledged never to sell or go public. Their new mission is to "help bring creative projects to life" and they are allowed to pursue this to the detriment of shareholder returns.

It's a form of moral leadership from the founders, who have given up on a potential return of hundreds of millions in exchange for pursuing a mission.

Kickstarter decided to become a public benefit corporation because "there's a huge difference between a values document and the legal foundation of your company," said Mr. Chen, who serves as chairman but focuses on making art.

Kickstarter still has investors to answer to. While the company has not yet raised much money — less than $15 million, with the founders retaining majority ownership — some well-known tech investors have backed it. They include Chris Sacca, a former Google executive who became a big investor in Twitter, as well as Union Square Ventures, a venture capital firm based in New York, and Jack Dorsey, co-founder of Twitter and Square.

Some of the investors said they knew what they were getting into, as Mr. Chen and Mr. Strickler made it clear early on that they were not looking for a massive payday from Kickstarter. Mr. Sacca said he believed there were other ways for shareholders to see returns from their investment in Kickstarter besides an acquisition or an initial public offering. It helps that Kickstarter's financial trajectory has been strong. Mr. Chen and Mr. Strickler say their company has been profitable for years — in the $5 million to $10 million range per year for each of the last three years — and has continually reinvested that money in the business.

Kickstarter Focuses Its Mission on Altruism Over Profit [Mike Isaac and David Gelles/NYT]

(via Waxy)