Bart is one of the three founders of B Lab â an organisation based in the United States that has started a movement to combine purpose and profit in business. The movement started seven years ago, after Bart and his friend and colleague sold their t-shirt and basketball shoe company AND1, and watched as their integral values â community involvement, responsible business practice and workplace culture â were stripped away. They questioned how success in business had become limited to profit maximisation and set up B Lab with the goal of harnessing the power of business as a force for good.
Seven years on, B Lab have developed a number of initiatives to further this goal, including the the âB Corporationâ certificationÂ andÂ the âImpact Assessmentâ, a free online tool for business owners to âmeasure what mattersâ.
I was in Colombia for a B Lab global gathering when I had the opportunity to talk to Bart. It wasnât the first time we had spoken. In fact, weâd met a number ofÂ times through my work with Small Giants â Dumbo Featherâs parent company â to bring this movement to Australia (check out Australia and New Zealand’s founding B Corps!) It was however the first time we had theÂ opportunity to sit down and talk properly. We spoke about the various twists and turns that had led us both to this hotel room…
Bart Houlahan:Â Do I believe in fate? I do not. I believe in free will. People make the life they work toward.
Well just to explain from the outset, B Lab doesnât want to be leading this movement. We view ourselves as a service agency for leaders who are truly creating impact, our entrepreneurs. Thereâs a reason why you may not have seen a lot of articles about us or about the non-profit B Lab. Itâs quite intentional, in that we exist to serve entrepreneurs who are using businesses as a force for good. If we do not serve those entrepreneurs, we donât create any impact. The real work is being done by the community of now 1000 B Corporations who are completely innovative in solving some of the worldâs greatest challenges.
Backing up to your question, I am a businessman by training. Went into investment banking on Wall Street right out of Stanford University. I actually loved the work, but didnât enjoy Wall Street, so I left and moved to Boston where I continued in investment banking for another five years. I decided that investment bankingâ though I really enjoyed itâwasnât going to be a career for me. I really wanted to be in operations. I wanted to be an entrepreneur. I sketched out a six-year road map that included a business that I enjoyed, with partners whom I trusted and a place where I could be a senior member of the team. That plan included two years at Harvard Business School.
I was a month away from starting at Harvard when I ran into my college roommate Jay Coen Gilbert, at a Stanford wedding. Perhaps a year earlier, he had started a small athletic T-shirt company called AND 1. It was very small; probably half a million dollars in revenues. Jay was lamenting that he hadnât been able to find a chief financial officer to join the organisation. I called him some nasty words and said, âI canât believe you didnât call me.â
He said, âYouâre going to Harvard! Thereâs no way youâre going to give up Harvard to come and join a half-million-dollar T-shirt company.â
I said, âWell, it all depends upon what the T-shirt company aspires to be.â Over the course of the weekend we agreed that I should forego Harvard. I called, told them to keep their deposit, moved my wife and my two children from Boston to Philadelphia and joined AND 1.
That was in 1995.
It seemed like the six-year plan had accelerated. This was an industry that I was really interested in, with people I adored and trusted implicitly; an opportunity where I could be in a significant role, add immediate value and help the company grow. It was as if all the in-roads had been leap-frogged in a single weekend. It just made total sense. Harvard wasnât going anywhere. If this didnât work I could always go back to business school. This was the opportunity Iâd been looking for, just a lot sooner than I expected.
I originally joined AND 1 as the CFO, and became president a year later or so. It was a magical run. My first year we achieved 1.2 million in revenues and then we scaled it to a global footwear and apparel brand with 250â300 million in revenues. We were in 80 countries as one of the top-two basketball brands. And we did it the way that we wanted to; we built the company that weâd be proud of. For us, that meant an organisation that was family centric, that created an environment where employees and partners wanted to be, unparalleled benefits, a structure where nobody had set hours; you worked when you needed to work to get your job done.
You were responsible and accountable for your job, not for the hours at the office.
Our sick policy was “if youâre sick, youâre sick, donât come in and get the rest of us sick.” We had eight dogs roaming through the office, a full court basketball court, yoga classes, dry cleaning and haircuts and all sorts of things to try and create an environment for the employees that felt like family. We realised pretty early on that the impact of our business was far beyond the 300 people that worked for us, that in fact, we had thousands upon thousands of people making our products overseas. We wanted to extend that familial approach to the factories where we made our apparel and footwear. That meant a rigorous code of conduct with quarterly audits. It meant approaching those suppliers like partners, rather than adversaries. That approach paid for itself many, many times over.
We also were a global business that believed you could act locally. That meant we had 10 per cent of all profits going to charitable local organisations, we had a robust service program where we gave all employees two weeks a year to volunteer, paid. Iâd say we were awakening to the global climate crisis. We were trying to do our part, albeit in small waysâŚ
I was there for about 11 years and there were some very clear learnings. The first was that business was the most powerful force in society. That if harnessed appropriately, it could be a force for good. But it wasnât set up that way. As we scaled the organisation we recognised that our commitment to our community, our workers and the environment, frankly, became more difficult. We did a leveraged recap in 1999, where we brought in professional, outside investors. They were great investors, but we knew that the game had changed. We were playing with somebody elseâs money and that meant that we had a legal responsibility to provide a real return to those shareholders. As we brought in new management, there were cultural expectations about what business was for.
Finally, when we reached the moment of liquidity â the moment for this management team to move on â the opportunity for us to consider employees, community and the environment did not exist. At the moment of succession, certainly at least in the United States, itâs abundantly clear that you must maximise shareholder value as you sell the company. We knew what we were doing; I was an investment banker prior to our work at AND 1. The person who bought the company paid us absolutely fair value. It was his business thereafter. But within six weeks of the sale, whatever remaining commitment we had to our workers, our employees and the community was stripped out. It just seemed that there had to be a better way. There had to be a way that an entrepreneur could scale both profits and purpose and not lose mission at the moment that it mattered most, at the moment of succession. It was completely clear to me that business could be a force for good, but there needed to be some structural changes to create an environment where an entrepreneur could indeed do both: make money, make a difference.
Itâs a good question. I think youâd get a different response from Jay and Andrew as to why they co-founded B Lab. We all came to this from a slightly different perspective, but with the same insight, which was that business was an incredibly powerful force that could be harnessed to truly solve some of the worldâs greatest challenges. We also recognised weâd been given a gift through a successful private sector career. Weâd be given the opportunity to choose our next step, which we all felt strongly should be more service oriented. It made sense to us that that business could indeed be a force for good and that this was an opportunity for us to serve a bigger roleâto create a platform for those entrepreneurs and investors who wanted to use capitalism for change.
The first step was listening. We interviewed hundreds, if not thousands of investors and entrepreneurs, thought-leaders, non-profits, who were in this space. Firstly, to try and figure out how we could be of service at all.
If you look at our original business plan, it is very different than where we ultimately landed. The vision was the same, but the actual tools that we intended to use to build this platform â where we could redefine success in businessâwere different. That spirit has been maintained through all seven years of B Labâs existence. We are true agnostics (but weâre not mission and vision agnostic). What we were trying to do for the first year and a half was to learn. Thereâd been people who had been doing this far longer than we had, who had made incredible progress. This existed way before B Lab and B Corporations.
All we were trying to do was harness this community, give it an identity and a platform to act as a collective.
At the time, we observed that there were thousands of businesses that considered themselves triple-bottom-line businesses. But they were all screaming with their own voice: âIâm fair trade!â âIâm organic!â âIâm green!â âIâm local!â âIâm charitable!â âIâm an ESOP!â Those, to us, were manifestations of the same intent. Using business as a force for good. Our hope was to try and bring that community together under a common identity; to have a collective voice which could influence all business to move towards a sustainable future. So that was one novel insight we brought: this isnât about your product or the practice, it isnât about a particular constituency that matters most to you, itâs about a new way of doing business. We will be stronger and more impactful as a community rather than as individuals. So the idea of a corporate certification, something that looked at the whole rather than the individual pieces, was a novel place to start.
Weâre completely grateful to the founding B Corporations. Because frankly, they had an awful lot to lose in lending their name and credibility to a nascent movement. We were not competitive with any existing certification or existing organisation. We were creating a new opportunity for people to be part of somethingâcross industry, cross company size, cross geography, cross impact areas. I think people were willing to lead. At moments of crisis, leaders step up. People were evaluating the fact that there had been wonderful work for 35 years, but there just wasnât acceleration. Leaders like Jeffrey Hollender of Seventh Generation and Adam Lowry of Method home products came together and said, âWeâre direct competitors, but we both want to be B Corporations.â Along with Xavier Helgesen from Better World Books and dozens of others, they ended up becoming our first 82 founding people. We stand on their shoulders, undoubtedly.
Obviously weâre excited about the progress thatâs been made and simultaneously realistic that we have an enormous way to go. We often talk about this collective work as a generational play, that weâre in it for the long haul. Itâs a marathon. Perhaps weâre at marker one or marker two. But those markers were important. The next bit is about acceleration. So weâre really excited and simultaneously cognisant about the distance we still have to travel.
About two years ago, we banned any three-year outputs and outcome objectives from B Lab. We believe we have clarity on the next 12â18 months, and 20â30 years. What we are trying to instil in our team, our partners and in the community is the recognition that we need to be nimble, flexible and willing to pivot. Weâve pivoted over the last seven years, repeatedly, and it was simply a recognition that trying to predict clearly what tools would be necessary three years from now is unrealistic.
We measure our success in 12-18 month buckets, and whether it is moving us towards a generational change. The in-between is very murky.
As a result, we need to be entrepreneurial in the way that we approach it. So weâre one of those organisations â and hopefully one of those movements â that believes that entrepreneurship can, and needs to be, at the centre of everything that we do.
So if you havenât noticedâŚ I donât like talking about myself. Itâs always been the case. Itâs not that Iâm uncomfortable with the spotlight. I donât believe the spotlight deserves to be here. Well, for all the reasons weâve already discussed. But, how do I measure my own success? First, as a father. Whether Iâm prioritising family first. My definition of âfamilyâ is very broad.
Yeah, and as a result family to me includes friends and co-workers and the community of B Corporations and global partners. Those concentric circles, to me, matter most. I measure myself on whether I am being of service and use to people I care about most.
Secondly, my time at B Lab is measured by what I â hopefully â have to give. If I thought there was something else that could use my modest skill sets to a greater good, Iâd go do that. But right now this seems like a place where I can be of service for, you know, the audacious goal of redefining the role of business in society. I think thatâs a worthy cause to pursue. I think thatâs pretty much how I look at the world. You canât get mired in, âWhoâll join the community?â âWhat partner did we sign?â âWhat law passed?â to measure your own success. It would be awfully exhausting.
Certainly. My father was a professor of English literature. My mother was originally a counsellor at the local YMCA. Both went on to successful entrepreneurial careers. I grew up in a suburb north of Chicago. We were fourth generation Evanstonians (this small town called Evanston where Northwestern University is). The sense of community is tangible in that area. So certainly, I think from a very early age, the idea of service to the community was incredibly important to our family.
Iâve been asked often, âWhat was the âEureka momentâ for you?â I donât think there really was one. But there certainly was a moment of acceleration, and that was when my father passed at 63 of cancer. It was 11 years ago. I was 35. I had an 11 and nine-year-old daughter. Losing my hero, my perspective on the world was changed. I look at everything that has happened to our family from that day forward and the course was altered dramatically. Iâm pretty confident that I wouldnât be here at B Lab if my father hadnât passed. My wife is the chief operating officer of an educational non-profit. Iâm pretty sure she wouldnât be doing that. My daughters, at 11 and nine, started their own B Corporation.
My in-laws raised bees and the year that my Dad passed was the first time that they had a significant honey flow, about 200 poundsâwhich is a lot of honey. We were around the dining room table talking about what to do with it and my nine-year-old said, âWell we should sell it and give the profits away to charity.â And my 11-year-old said, âYeah, we should try to cure cancer.â So they came up with the name at the table and sketched out the logo. Itâs called âHives for Lives.â They have since raised $300,000 in nine years for cancer research.
They were in every Whole Foods store.
That all wouldnât have happened if my father hadnât passed, obviously. My oldest daughter followed my father to Yale University, and she is about to graduate in a couple of weeks. My youngest just started at Stanford.
Itâs hard to know what the road would have looked like without that moment. But I think itâs fair to say that the idea of using the remaining time you have to the best of your own skill set became crystal clear. That changed me.
He was all about family first. He lived his life with integrity and with community in his heart. He was adored by his family and friends, he was humble, he was brilliant and he was gracious. And he had great judgement without being judgmental. He was everything that Iâd want to be.
Yes, yes! I really enjoyed sharing that with my daughters. My oldest is graduating with a theatre and film degree. She believes in the power of art to change the world, using art as a tool for social justice. And both my daughters were honoured by CNN for their work at Hives for Lives, and one of the people they met at that gathering was Eve Ensler. Do you know Eve Ensler?
My oldest ran up to her and said, âYouâre who I want to be. Iâm trying to write my own book.â She was in eighth grade. And Eve, two years later, called Molly and said, âIâve written a show for teenage girls, essentially about the plight of young women across the globe. Iâd like you to audition for a role in it.â Molly landed a role. She travelled to Johannesburg to open the show and Eve has ended up being, essentially, a mentor and very close friend of Mollyâs. Thatâs a gift, right? And thatâs a gift from Dad.
Sheâs unbelievable. Iâve only had the privilege of meeting her a couple of times but the ability to be a global leader and still a personal friend to a 15-year-old girl is extraordinary. To see the kindness and the generosity in her heart and the time she makes for people is remarkable. Sheâs an amazing woman.
So, I donât know how I got on that tangent but in any caseâŚ Iâve enjoyed sharing that with Molly and Carly. The other thing is that you learn as much from your kids as you teach. The girls have taught me about entrepreneurism, theyâve taught me about leadership. Theyâve taught me about grace and generosity and motivations, theyâve been a remarkable part of my life.
Oh! That’s a beautiful word.
I love that.
Every Monday morning at B Lab we ring the bell to welcome new members into our community. And what is surreal for me is that currently, 27 per cent of those community members hail from outside of the United States. The incredibly innovative ways that theyâre solving poverty challenges, rebuilding the community, preserving the environment, creating a great place to work or addressing wealth disparity â itâs absolutely amazing, and why we all get up in the morning.
When I graduated from college, I wasnât looking for meaning in my work. I went to Wall Street and checked my values at the door; did my job for 15 hours a day picked my values up on the way back out. I think to a large degree that model doesnât fly anymore. I think that millennials are looking for meaning and purpose in their work and in their life. They expect more than just money from their employment.
I think more than anything else, attracting and retaining the next generation of great talent is going to drive this change as much as anything. When I speak to large corporations, and I talk about a shift in consumer behaviour, or the increase in capital flowing into âsocially responsibleâ investing, sustainable investing and impact investing, admittedly I donât get a lot of buy-in from that community around those two issues. But then when I talk about talent and business schools and what currently represents 50 per cent of the global workforce millennialsâŚ
There is an acknowledgement that there is a battle for talent. If talent is interested in meaning and money, there is a realignment that will need to take place.
I think the evolution has been accelerated, frankly, by a tumultuous financial crisis that, for the globe, changed its perspective on business. When we began this initiative in 2006, the idea of talking about organisations with higher purpose, accountability and transparency was somewhat fringe.
Yeah, crazy hippies! Which was difficult for me to be categorised as! But post the financial decline, mainstream voices are calling for an evolution of capitalism. Some principles that we were fortunate to embrace early on put the movement in a good place to capitalise on a horrible financial crisis. Some of those include standing for something instead of against.
Early on, as we talked with hundreds of entrepreneurs, there was clarity that they wanted to be a positive alternative. That being defined as what we are not wasnât a great way to form a movement. So the impact assessment, you donât earn any negative points. There are no prohibitives to being a B Corporation or joining this community. Instead, weâre offering a positive alternative for investors, consumers and policy makers to support. I think that has served this movement well. Positioning our core identity as being the positive alternative.
Jay and I have known each other now since 1985. I was 17 when we met. We were best friends before we became business partners. The reason why I get up in the morning is to serve the entrepreneur. I also get up to work with people I love. That begins with Jay and Andrew. Working with your best friends is a gift and a privilege. To have complete trust, recognise each otherâs skills and weaknesses.
I think the best entrepreneurs understand what they don’t know, and surround themselves with incredible talent.
To have been surrounded by Jay and Andrew for decades now has been an incredible gift for me, because they bring skills I will never acquire. Itâs made the team more powerful than the individual, by a lot. Andrew was at Stanford with us. He was a couple of years behind us. But he was also a college dorm mate. So we lived together as well. Weâve known him for 27 years.
Yeah. So he was among the very first investors in AND 1, providing advice and financial wisdom. The three of us I think bring different skill sets and, most importantly, trust in each other.
So I’m going to alter the question slightly. “What am I most worried about?” If that’s okay.
I worry about moving this initiative to mainstream. When we began this initiative, it wasnât about just creating another certification or a new legal form or a vehicle to drive capital, it was about moving all business towards a more sustainable future. It was asking the fundamental question: âWhat is the role of business in our world?â and hoping to provide, along with legions of others who are working on the same issue, a path towards getting business more engaged.
With more than three-quarters of the worldâs economy in the private sector, itâs kind of necessary. Governments and non-profits are insufficient to solve these challenges. So what keeps me up at night, what I worry most about, are the incredible challenges of taking the power of a small group of visionary leaders and giving them the tools to affect business in the mainstream.
If we wake up a generation from now and all we’ve created is another bug on the side of a coffee bag… It probably will have been a waste of time.
To come back to what we spoke about earlier: âIs this the highest and best use of your time? Is this achieving impact?â The change that we seek is to redefine the role of business. The impediments and obstacles are many, and the journey will be a long one. Iâm anxious about moving to mainstream.
I think this community has changed the conversation already, globally and beyond B Corporations. I think businesses as a force for good have already changed the conversation. You can see that in consumer trends, initiatives by government, movement of capital and business practice.
If you go back, the change in how business engages with this idea in the last two decades has been dramatic. You go back two decades and people were writing a cheque to their local boys and girls club and calling it their corporate social responsibility. Providing a nice little ad campaign about it and theyâve checked the box. Today people are talking about subsidiaries and organisations that are focused on community and poverty alleviation. Sustainability is no longer just a department; itâs embedded in all departments of the organisations. So thereâs been a pretty rapid movement. But that being said, we have such a long way to go.
Iâll come back to when we started: people. Iâm incredibly fortunate to work with and serve people that I love and admire. That keeps you going, very easily, very clearly. And secondly, I think thereâs a reasonable shot that the vision of B Lab wonât be met in my lifetime. So you better enjoy the journey. Right? I try to do as much as I can with our community and the people with whom I work to enjoy those milestones, and recognise that the great progress weâve made. Weâve in some small way contributed to that shift in the dialogue. We have these core guidelines up on the wall at B Lab that weâre going to share with the global partners this week about how to be an effective associate at B Lab: âWe take the work seriously but not ourselves seriously.â Youâve got to enjoy what youâre doing.