Ben and Jerry’s
Joel on Software’s Strategy letter I: Ben and Jerry’s vs. Amazon
On “linked prosperity” with the Ben and Jerry’s business model:
From their earliest days at the gas station, Ben and Jerry had been committed to running the business in a way that gave back to the community. Strapped as they were for cash, their efforts usually took the form of free ice cream cones or low-budget celebratory events like the movie festival and Fall Down.
The motivation for giving back had always been genuine. At the same time, it was proving to be an effective marketing strategy. There was no doubt that our customers were more inclined to buy our ice cream and support our business because of how we, in turn, supported the community.
In describing all of this, we began to talk about the concept of “linked prosperity,” a term coined by Dave Barash, one of our managers. What it meant was that as the company grew and prospered, the benefits would accrue not just to the shareholders, but also to our employees and the community. Each constituency’s interests were intertwined with the others’.
To institutionalize the donations policy, we created the Ben & Jerry’s Foundation, a nonprofit organization that was set up with an “independent” board of directors, albeit one on which Jerry, the foundation’s president, and Jeff were two of the three members. Ben gave the foundation fifty thousand shares of his stock as an initial endowment. In addition, the company planned to make the foundation the primary recipient of its cash donations by giving them seven and a half percent of its pretax profits. The foundation, in turn, would give away the money via grants to nonprofit organizations.
-from Ben and Jerry’s: The Inside Scoop p. 237
The idea that a company has obligations to stake-holding groups other than its shareholders is a relatively new one. As we grappled with the practical implications of that fundamental premise, there were few examples in the business world to follow and learn from. It’s my hope that this book, by relating our company’s experience, will be of assistance to the growing number of businesses that are now moving in that direction.
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