Perry Chen launched the arts crowdfunding website Kickstarter from his hometown, New York City, in 2009, along with two co-founders. Yet he's something of an accidental entrepreneur – at heart he's a musician and artist.
Back in 2001, Chen was a twentysomething DJ based in New Orleans, composing electronic dance music in the drum-and-bass genre. He wanted to bring the Austrian DJs Kruder & Dorfmeister to perform during the New Orleans Jazz Festival, but he didn't have the money to get it done.
It occurred to him that if he could put the word out via the Internet, pooling small donations or ticket pre-sales from hundreds of people could make it possible to fund musical or artistic projects that would otherwise go unfunded.
It took several years to go from idea to action: Chen and two friends launched Kickstarter in 2009. Today, in 2019, a decade since its launch, Kickstarter is the world's biggest crowdfunding platform for creative arts projects. Perry Chen is now 43 and living in Paris; he stepped back from running Kickstarter in March this year, though he remains chairman of the company's board.
"I didn't want to do it [start a company], really; I was a musician, not a businessman. But I thought the idea was great," Chen told DW. "By now, about 175,000 creative projects have been successfully funded, and around $4.7 billion have been funneled from the fans, from the people, to projects promoted on Kickstarter."
The company's mission is "to help creative projects come to life." More than 17 million people have contributed funding through Kickstarter for music, film, video, games, fashion, food, photography, crafts, theater, technology, and other creative projects. However, as can be seen from the statistics provided on the Kickstarter website, only a minority (37%) of projects launched on the site achieve their initial funding targets.
Perry Chen (C) and his friends, Charles Adler (L) and Yancey Strickler, launched Kickstarter in 2009
Anchoring the mission
What Kickstarter has achieved is to democratize the ancient practice of arts patronage. In the past, usually only the very rich have spent money on supporting arts projects — the Medici banking family's commissioning of many of Michelangelo's greatest works is an example. Today, by crowdfunding — pooling many small contributions in support of a given project — middle-class folks too can be arts patrons.
From the beginning, Kickstarter's founders decided to focus only on funding arts and creative projects. They could have expanded into other areas and brought in more money, and they could have sold the company — "we had offers," Chen said — but they had decided against that from the start. In 2015, to ensure the permanence of their decision, they formally re-incorporated Kickstarter as a Public Benefit Corporation (PBC).
"Becoming a PBC allowed us to lock in this thinking for the long term. Could we have sold Kickstarter and become very wealthy ourselves? Yes. We chose not to. Getting ultrarich wasn't the mission. Helping creative projects come to life is the mission."
Serving stakeholders: Purpose corporations
That doesn't mean Kickstarter isn't profitable. It is that — but generating profits is only one goal amongst others; it's not the company's main focus. This broader perspective is the motivation for the new class of "benefit corporations" for which various American states have passed enabling legislation in recent years. In the US, ordinary limited liability companies are legally required to focus exclusively on "shareholder value," i.e. generating financial profits and dividends for shareholders. In contrast, "benefit corporations" specify additional goals and stakeholders in their corporate charter, which the company and its directors are required to serve.
But shouldn't all corporations serve a broad suite of stakeholders — not just owners of the company's shares, but also clients, employees, the host community? Perry Chen thinks so, and that's why he was in Berlin in late November to participate in an event hosted by Purpose Foundation, a group founded in 2015 to promote "steward ownership" of companies.
Kickstarter co-founder Perry Chen (C) speaking at an event organized by the Purpose Foundation in Berlin
The idea that companies should serve a full range of stakeholders is gaining ground. In August 2019, the US Business Roundtable, an association of powerful American corporations, released a remarkable statement signed by the heads of 181 major corporations.
"Since 1978, Business Roundtable has periodically issued Principles of Corporate Governance. Each version of the document issued since 1997 has endorsed principles of shareholder primacy — that corporations exist principally to serve shareholders. With today's announcement, the new Statement supersedes previous statements and outlines a modern standard for corporate responsibility," the lobby group said in its press release dated August 19, 2019. The new document "affirms the essential role corporations can play in improving our society when CEOs are truly committed to meeting the needs of all stakeholders," including "customers, employees, suppliers, communities, and shareholders."
But the Business Roundtable's statement, unlike a benefit corporation's charter, isn't legally binding on the company executives that signed it. DW asked Perry Chen what it would take to move the majority of the corporate world to the "benefit corporation" model – so that companies like Kickstarter are the norm, rather than the exception.
The first step, Chen said, is to have operational models of steward-owned benefit corporations, like Germany-based technology multinational Robert Bosch Corporation, which has been owned by the philanthropic Robert Bosch Foundation for six decades; or the Berlin-based search engine company Ecosia; or Kickstarter PBC.
"We need purpose companies thriving in competitive marketplaces, competing successfully against conventionally-owned, shareholder-profits-focused companies. We need models. That's the phase we're in now… All of this stuff still sits within culture," Chen said. "Culture is really dominant. Eventually, politicians will be elected from this shift in culture, and they'll be looking for models, for viable tools," like the PBC model or other new corporate forms currently being developed by the Purpose Foundation and its allies.
Some politicians are already on the case. US Democratic Party politician Senator Elizabeth Warren, for example, who is vying for her party's nomination for the 2020 presidential election, has proposed that all corporations with more than $1 billion in value should be required to become PBCs – a move which would, in effect, legally formalize the high-sounding aspirations of the Business Roundtable statement about corporations serving a full range of stakeholders, not just shareholders.