An Internet company not vying to become the mythical ‘billion’ dollar unicorn? That’s a new one, and if you guessed Kickstarter would be the one to do it, go ahead and collect the office pool. Then donate your winnings to charity.

Kickstarter announced Sunday it was reincorporating as a ‘public benefit corporation.’ Like many Americans, you see ‘public good’ and wonder what the hell is going on? A company not trying to screw me over?

The two co-founders, Yancey Strickler and Perry Chen, are opting for the altruistic route over the IPO millions route. The cynic in me says no kidding avoid the IPO route. Wall Street isn’t exactly a rational actor these days.

The optimist in me thinks it fits with what the company has done from day one. They donate 5% of after-tax profits to causes that fight inequality. Yeah, instead of donating 5% and taking the write-off, Kickstarter chooses to give after the fact.

If there ever was an Exhibit A they are not a public company; that is it.

“We don’t ever want to sell or go public,” said Mr. Strickler, Kickstarter’s chief executive. “That would push the company to make choices that we don’t think are in the best interest of the company.”

The public benefit designation does not prevent them from going public. That’s an important distinction. If the founders want to roll the dice on Wall Street, they can. It does make Wall Street look on with skepticism on if they can turn it into a momentum play. The calculus changes when business decisions have to account for the public benefit over quarterly projections.

It also holds the company to a degree of transparency not seen in most private or public companies. It was already a B Corporation, which makes the company meet stringent environmental and social responsibility standards.

Each year, the company has to report to its shareholders, offering insight not usually seen in companies. Other startups that are B Corps. include Etsy and Warby Parker. Etsy mistimed its IPO in April, and shares have been beaten down below the IPO price.

Public Benefit Corporation

The designation is fairly new and has been signed into law by a number of states. Delaware, where Kickstarter will be reincorporating, adopted the designation in 2013.

Delaware Governor Jack Markell talked about the designation in 2013:

“Public benefit corporations will harness the power of private enterprise to create public benefit. Companies consider profit to be the means — not the exclusive end goal — of their business.”

What does the designation mean for a company? A business must aim to do something that aids the public, hence the public good status. In the case of Kickstarter, its mission serves that purpose by helping ‘bring creative projects to life.’

It’s not just transparency and charitable contributions. Kickstarter goes out of its way to “not use loopholes or other esoteric but legal tax management strategies to reduce its tax burden.”

I’m gonna assume Donald Trump doesn’t do that.

Kickstarter and Investors

While the plan sounds laudable, Kickstarter does have obstacles to overcome. The company has raised around $15 million in VC, but some investors are already praising the move. Chris Sacca, a former Google executive who became an investor in Twitter, is confident he will see a return on his investment.

“It is a fast-growing, highly profitable enterprise. So, as an owner of the stock, I feel comfortable that I will be rewarded for that,” Mr. Sacca said. “When the time is right, I’m confident that Kickstarter will return cash to their loyal shareholders.”

And it’s not subject to the whims of algorithmic trading. Unless you think the Dow shedding 1,000 points in a couple minutes is normal, I’d be happy Kickstarter is staying away from Wall Street.

The co-founders have already pledged to start paying dividends to shareholders and employees in the next few years.

Kickstarter won’t be a lottery ticket for new employees coming on board. For some, that means doom and gloom for recruiting. That depends on how you look at it. Lottery ticket options or the promise of steady dividends. You’ll be surprised how many engineers, designers and other employees opt for that safety net.

The founders of Kickstarter are hoping the move will start a trend. Instead of focusing on becoming the next billion-dollar unicorn, just maybe they will opt to follow the passion that led them to start the company all the way through.

And who knows, if you aren’t raising cash to raise cash, you might find yourself with a company that makes money. Yeah, that’s a novel thought.

Gear. TV. Movies. Lifestyle. Photography. Yeah, I’m the type who sees a shiny object and is immediately captivated. Wait... There’s another. You can reach me at marcus@newsledge.com

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