No, the fact that it's a PBC does not necessarily limit the right of their investors. PBC just means that they need to commit a certain percentage of their profit to a cause. It's still a for-profit company owned by shareholders. They have not publicly disclosed their charter or other information.
That is not what this means at all. Legally, it means that the company has other priorities that it must consider equally to creating profit. This means that investors have a much higher standard to have standing to sue the company or oust the CEO if they don't return a profit or don't return profits directly to investors.
A good example of what this means in practice is developer awards from Bluesky Social. As I understand it, once Bluesky PBC starts making some profit they are planning to begin placing something akin to bounties on successful app projects within the protocol. I believe Graber called this "Coopetition" at some point, where developers are "competing" within the ecosystem but simultaneously working together to make the protocol's foundation stronger.
This is something that a PBC structure makes immeasurably easier to do. Why? Because the company has more responsibilities than simply returning profit to shareholders. The shareholders can't simply sue the company or oust Graber because of this, since Bluesky Social also has a legal responsibility to "develop and drive large-scale adoption of technologies for open and decentralized public conversation". Please do get read on what it actually means to be a PBC.
> Legally, it means that the company has other priorities that it must consider equally to creating profit.
Ok, so it's even more vague than how I understood it. This could mean anything.
Venture capital does not care about profits, they just care about selling their share at a considerably higher price than they bought it within ~ 7 years. In reality, most of the time, this happens through an acquisition. Many times this happens without the acquired company making a single cent of profit.
So how does it matter that Bluesky Social is a PBC in this context? It is still owned and controlled by shareholders, many of them venture capitalists. It can still be sold at an uncapped profit to the share holders.
I think you should reread my comment, as I have already answered this. The "control" that shareholders have over the company is severely limited, and they have limited legal recourse against company leadership if they decide to use profits in a manner they disagree with, but fulfills their charter. It should be fairly obvious in my example that it is not in the best interests of the shareholders to quite literally give away profits.
> a public benefit corporation shall be managed in a manner that balances the stockholders’ pecuniary interests, the best interests of those materially affected by the corporation’s conduct, and the public benefit or public benefits identified in its certificate of incorporation.
There is no language about committing a percentage of profits to a cause.
You are right that it's not specifically required do donate a certain percentage of your profits. It's even more vague than that. It basically just means that you need to commit to a certain "public benefit" in your certificate of incorporation:
"The Certificate of Incorporation of a benefit corporation commits the company to spending some of its profits or resources (or both) in support of a specific public benefit. If a benefit corporation decides to stop doing business and dissolves, the shareholders receive the proceeds of the sales of assets, after liabilities are paid." (from https://www.delawareinc.com/blog/non-profit-corporation-vs-p...)
I fully agree that a PBC isn’t a panacea. That doesn’t change the fact that you’re confidently asserting incorrect things. I don’t expect that you’ll change your mind, so I’m not trying to convince you, I just want to make sure that the facts are laid out.
What I'm saying is that very likely Bluesky will grow for a few years without making a cent of profit, and be acquired by another company. And this has not much to do with if they are a PBC or LLC or whatever...
% of VC-funded tech startups that exit via appreciable >$0 acquisition is actually not particularly high relative to total failure/success, which makes sense if you think about it. The odds would seem even lower in this case just for mentioning the word "federated," regardless of the tech.
How am I wrong? If I'm wrong it's that even more vague what a PBC needs to legally do to support its public cause, but in reality many PBCs end up with donating a certain % of their profits. But my understanding is that there are also other ways to support your public cause.
We don't know what Bluesky Social PBC has committed to in their certificate of incorporation.
A standard C corp (and more relevantly its officers) is legally obligated to maximize profit for shareholders at the expense of any mission.
For a B-corp if the investors sue the board or CEO for breaching fiduciary duty for not maximizing profit, the response is "we were following the mission (and you knew we would be following the mission going in), GFY"
Who cares about profit? We're in the VC world now, where many companies grow quickly without making a cent of profit and then get sold off. How does a B corp help here?
