76 ; INC. ; NOVEMBER 2019 ; ; ; ; ; ;
nation, for B corporations that commit irreversibly to
the dual roles of business.
In 2006, B Lab set out to “create a better world
through business.” The impulse is not unique, but the
experiences that shaped it are. Friends for more than
20 years, founders Gilbert, Bart Houlahan, and Andrew
Kassoy were not starry-eyed ideologues with big ideas.
They had started and run a successful business Friedman’s way and trusted the model, but didn’t like how it
turned out. Not at all.
As young, 20-something entrepreneurs, the trio
started, grew, and, in 2005, sold a successful global
company, And 1, which marketed and sold T-shirts and
later basketball sneakers and sports gear worldwide.
And 1 succeeded in a highly competitive business that
included Nike, Adidas, Puma, and other iconic sports-
gear giants. Who would give that up? And why?
Gilbert and his colleagues did not set out to disrupt the
Friedman model any more than they wanted to sell their
company. And 1 made its name on its “street” shoes, coun-
tercultural to corporate brands, around the time grunge
rock and hip-hop were disrupting mainstream pop music.
“We were experiencing Fortune 500–type growth,”
Gilbert explains in a glass-walled conference room at the
B Lab o;ces. “We were already a
$70 million business. And, literally,
the next year we were $200 mil-
lion.” As owners, they gave away
5 percent of their profits, a “couple
million bucks” a year, according to
Gilbert. Everything was good for
And 1, until it wasn’t.
Two events changed everything.
First, Gilbert says, the found-
ers realized that there were
10,000 mostly young women in
China making their products—
shoes and apparel. When they
visited the factories, they learned
“some pretty di;cult things,” he
“One of my partners went to
one of our first factories,” Gilbert
says. “He’s walking around, and
the factory manager—he’s look-
ing at lines of young women on
the factory floor—says, ‘Well,
each one of these lines can pro-
duce 2,000 [pairs of gym] shorts
a day, and so we should be able
to meet your orders.’;”
Gilbert’s colleague asked,
“What happens if they don’t meet
“We beat them,” the factory
manager answered matter-of-
factly. He wasn’t kidding.
Second, Gilbert says, six or
seven years into the company’s
fast-growing life, And 1 decided
to raise venture capital to expand.
But the VC investments created a
“mandatory liquidity event” in
Venture capitalists want to
maximize profits in as many
companies as possible as quickly
as possible, often through initial
public o;erings—which generate
substantial profits. VCs’ pur-
Know Your Values
At the core of every business is a set of values and
principles and a vision of
the world it wants to help
achieve. Taking the time
to articulate and express
them might be, to employees and customers, the
best investment you’ll ever
make in your company.
Commit Your Assets
Many companies make
positive impacts. Enduring social enterprises
build their business
models around them:
no impact, no business.
Maybe you’ve heard that
chickens contribute to a
bacon and egg breakfast
but pigs commit?
Measure Your Progress
What gets measured gets
done, so figure out what
your company’s social
impact metrics are and
make sure all of your
team members know
how their jobs are vital
to achieving them.
Invest in Progress
No company gets it all
right. Everyone is learning
new ways of making
impact core to their work—
and some other company
is doing it better than you.
Learn how to get better
when the world around you
is constant. Because you’ll
need to get better when it
Partner With Your
You might maximize
profits on your own, but
you cannot maximize
impact alone. Do business
with other companies that
are building the B econo-
my. Social entrepreneurs
are as innovative at creat-
ing positive impact as they
are about business suc-
cess. At the end of the day,
the B economy requires a
network of benefit compa-
nies working together.
How canyou join the
whether it’s right foryou?
B Lab is the single best
source of information to
build on,so startthere
( bcorporation.net). Find
out how to align your
companywith the principles and values that
define the B economy. If
you are a for-profit,you
can become a Certified B
Corporation. Ifyou are not
ready for certification or
you are a nonprofit,you
can use the B Impact
Assessment to find ways
to do more on the environment, racial and gender
equity, and other issues.
“The B economy is bigger than B Corps,” says B Lab co-founder Jay Coen Gilbert. “The issue is whether B Corps are part of an economy that is creating a more inclusive and sustainable business world.” Here are five ways every business can help build the benefit economy.
WORK FOR YOU
5 THINGS EVERY BUSINESS CAN DO