A Conundrum for Social Entrepreneurs: Selling Your Company Without Selling Out

S09-Website-Button.jpgNext to the Dr. Bronner’s soap, it’s hard to think of a consumer packaged product that wears its makers’ political and social stance more on its sleeve (or rather, label) than Ben & Jerry’s ice cream. The delicious treat is an iconic sustainable product. So when Ben and Jerry sold their company to multinational consumer packaged goods producer Unilever in 2000, did they become iconic sell-outs?
That’s a good question, and one that was addressed during Tuesday’s Investors’ Circle Spring Conference in a session called “The Sell Out.”
When we ask “what is a sell-out?” we have to use a common standard for measurement, said the panel’s moderator Mark Albion, founder of Net Impact and best-selling author of True to Yourself and More Than Money. His suggestion for a metric was to ask whether the acquired company continues the founder’s efforts to create social good in its efforts to run the business. In other words: Is today’s Ben & Jerry’s ice cream doing as much or more good work than the privately-held company run by Ben Cohen and Jerry Greenfield achieved? Panelist Pierre Ferrari, chairman of the board of Ben & Jerry’s, responded that from a purely utilitarian point of view, when you consider profitability only, then the answer is a clear yes. But when viewed through the lens of social responsibility, the firm in some respects is “not as good as it was under [the original] Ben & Jerry’s management,” he admitted.

Still, Ferrari doesn’t consider Cohen and Greenfield sell-outs. He says there a number of ways that Ben & Jerry’s corporate culture has led to improvements within Unilever and ways in which Unilever’s backing has enabled Ben & Jerry’s to remain committed to and even grow its commitments to things such as support of minority-owned businesses and environmental programs.
For most social entrepreneurs, allowed Albion, being acquired by a larger company is not a death knell. It’s part of the growth plan – and indeed, the likelihood that a startup will be snatched up by a bigger player makes it attractive to its earliest investors. Social investors are no exception.
Does that make selling a social enterprise any different than selling a company that’s less focused on the triple bottom line? In some respects, no. Ferrari says that any acquired company, regardless of its social mission (or lack thereof) will carry with it a “genuine, and committed group of buyers of the product. If [the acquiring] company doesn’t respect the buyers’ wishes, they’ll fail.”
But that risk – that perhaps the acquirer will fail to remain committed to the customer’s expectations – kept Judy Wicks from selling her Philadelphia restaurant, the White Dog Caf√©, for many years. But as she explained to attendees, she finally sold the company this year – but with a long, important list of conditions.
Wicks operated the restaurant for more than 20 years and though it was wildly successful – with its committed patrons and known nationally for its locally-and ethically-sourced food and responsible business practices – she never scaled the business to multiple locations. “Rather than growing wider, I grew deeper,” she said, referring to her mission to share her business ethics and practices to the community around her – even to the point of sharing her approach with other restaurants in the area, in the hopes that these competitive businesses would come to support the same responsible vendors and farmers that Wicks had been using for years. Plus, she worried that by expanding the business, she would begin to lose the personal connections and relationships she had for so long fostered with her employees and customers.
But when the White Dog Café trademark and logo came up for renewal, she hatched a plan that would allow her to sell the company in a way she could live with. She sold the physical restaurant to a local restaurateur, but retains ownership of the White Dog Café name and logo, which she licenses to the new owner. The sale was also contingent on the buyer signing a social contract that binds him to a number of important business practices, such as continuing to buy local, ethically-grown food. The contract also stipulates that any additional café locations be developed in the Philadelphia area and that they be housed in buildings even more energy-efficient than the current restaurant, which is highly efficient and powered by renewable energy sources.
Ben & Jerry’s and the White Dog Caf√© took vastly different approaches to acquisition. The ice cream maker decided to scale – to really, really scale – the firm while Wicks took great pains to ensure that the restaurant would remain small and community-focused. Regardless of whether one company is more or less of a sell-out, both had to navigate the acquisition process with great care in order to protect the founding, social mission. And in both cases, this work is ongoing.
We’d love to hear your thoughts on how social entrepreneurs should approach the big questions around selling or not selling, and to whom. Let us know: contact@triplepundit.com

Freelance writer Mary Catherine O'Connor finds that a growing number of companies are proving the ways that they can make good financially, socially and environmentally (as the triple bottom line theory suggests).With that in mind, she contributes to Triple Pundit, as well as to Earth2Tech and other pubs focused on sustainability. She also writes The Good Route, an Outside Magazine blog that addresses the intersection of sustainability and the active/outdoor life.To find out more, or to reach her, go to www.mcoconnor.com.

3 responses

  1. Interesting thoughts – adds a new dimension to entrepreneurs who are thinking/dreaming of selling what they have created. But I’d love to know the number and extent of “social entreprenuers” in this country – ¬†what separates them from “just plain” entrepreneurs whose businesses support one or more social causes? Or from merely socially responsible and socially sensitive entrepreneurs?
    Feels like a continuum — but are there some widely accepted definitions or distinctions?
    Yes — I guess I could go to wikipedia but . . .

  2. Mike, you pose important questions here, and there tossed around a bit during the session. one way the companies can profess/certify their green cred is through the B Corp effort (see: http://www.triplepundit.com/pages/b-corporation-a-way-for-good-companies-t.php ) but this might not really work for any number of companies, for many different reasons. besides, corporate status is a state-based law and that means B Lab will have to get it the designated written into 50 different law books. a huge undertaking.
    i guess at the end of the day it might not matter whether an a entrepreneurs are “social” or “just plain.” the important part is whether they seek more than just profits. there are entrepreneurs who are called innovators and there are those who are just said to have had a great idea or two. sometimes they are one and the same person.

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