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Colorado’s newest billion-dollar B Corp is part of a movement to make a social impact — and profits

Guild Education's valuation is now over $1 billion as the company's model shows it can still make money and grow fast, while not pursuing growth at all costs

Rachel Romer Carlson, CEO and co-founder of Guild Education, meets with with Terrence Cummings, vice president for Client Success, and Nancy Holum, director of Client Success, for a team check-in brainstorming session from Guild's downtown Denver offices on November 30, 2018. (Kathryn Scott, Special to The Colorado Sun)
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Fast-growing Guild Education figured out how to help more than 400,000 service workers take college classes — and get their employers to pay for them. It’s no wonder that investors have been drawn to the profitable-ish business model and a nearly unlimited number of potential users.

Last week, investors led by General Catalyst managing director Ken Chenault, the former head of American Express, put $157 million into the Denver company, which is now valued at $1 billion. But Guild is not your typical tech unicorn. It’s a B Corporation, a special club of businesses that have pledged to balance profit with social impact and shareholders. Guild has managed to find investors who also feel there should be more to the bottom line than just making gazillions of dollars for shareholders.

“Ken and I really bonded over this shared belief that we’re in this unique chapter in history where CEOs are incredibly powerful in their ability to create social change,” said Rachel Romer Carlson, Guild’s CEO and co-founder. “If you align your mission and your margin and your business model such that you don’t have the temptations or the erosion that might lead to a distorted business model, then you can be a double bottom-line business, and I think that’s the crux of it.”

Wonderkind CEO Rachel Romer Carlson, co-founder of Guild Education, leads the latest tech unicorn, which means a company valued at $1 billion or more. Her company is also on a mission to help service workers get a college degree. Being concerned about profits and social impact led Guild to become a certified B Corp, which must weigh profits with social impact. Carlson is also supermom as the mother of twin daughters, Magnolia, left, and Lily Grace, in a photo from November 30, 2018. (Kathryn Scott, Special to The Colorado Sun)

The streak of venture-backed, money-losing, growth-at-all-cost companies with billion-dollar valuations — some with billion-dollar quarterly losses (hello Uber and WeWork) — has come undone, souring many on unicorns. That, combined with misdeeds that spurred the #MeToo movement and private-equity greed that decimated Toys R Us, Sports Authority and too many newspapers, has created a new wave of entrepreneurs, investors, employees and even politicians who want to support purpose-driven companies to make the world a better place but still make money. 

“We’re seeing more and more of a trend towards a broader stakeholder approach as opposed to just pure profit-minded approach,” said Peter Adams, executive director of the Rockies Venture Club, one of the largest angel investor groups in the region. “That goes all the way up to the public spectrum and then down to the early stage startups that we work with. Hopefully someday, B Corp certification won’t even be something that we need to do because it’s accepted that that’s the way companies should behave.”

The challenges of B Corp

The growth of social-mission-driven companies has seen the number of B Corp firms triple in five years, with big names including Patagonia, Athleta and Techstars. 

B Corp is a designation indicating that a company is committed to doing something good. It was started in 2006 by three Stanford University grads-turned entrepreneurs who wanted to see corporations benefit more than just the shareholders. They created the nonprofit B Lab and then the B Corp certification, which grades members every three years on five key categories that touch on ethics, worker benefits, diversity and environmental impact. Companies need a score of 80 out of a possible 200 to remain certified. 

By 2010, B Lab pushed to make the status legally binding and supported legislation to recognize benefit corporations that write their mission into incorporation. Doing so can protect the company’s mission during fundraising and leadership changes. Today, 36 states allow public benefit corporations, according to B Lab. (Colorado passed this in 2013. The Colorado Sun is a public benefit corporation, but has not sought B Corp certification.) B Corp bylaws expect companies to amend their legal documents in applicable states to consider the impact of their decisions on all of their stakeholders, not just shareholders.

The number of B Corp-certified companies continue to grow. In 2010, there were about 300. In 2014, there were about 1,000. Today, there are 3,132 companies in 71 countries. In Colorado, membership has quadrupled to 95 in five years, according to B Lab. 

The community is especially strong in Colorado, where the B Local chapter holds educational events and provides tools and resources, said Brian Lichtenheld, who helped shape the chapter and sits on the board. He credits a grant from the Gary Community Investments in Denver that got things started around 2013.

“We’re really on this tipping point,” Lichtenheld said. “When you think about the dramatic inequality and inequity in our country right now, and you think about the real risks that we face from a (financial) perspective, the B Corp movement has a profound possibility of leading and galvanizing that change.”

But getting B Corp certified is an arduous process, plus there’s an annual fee — between $1,000 to $50,000 or more. The certification process is constantly changing, like the recent addition of assessing how a company serves its customers. The label also isn’t well known with consumers, so some companies don’t view it as a good marketing tool, said Rosanna Garcia, an associate professor of marketing at the Daniels College of Business at the University of Denver. 

So why do it? 

“That is a question that we as academics have raised with these companies. If it’s not for a marketing purpose, why are you doing it? And time and time again we do hear, ‘it keeps us honest,’ meaning that if we say we’re going to do this, we now have a way of actually having the metrics in place that says we’re on track or we’re not on track,” said Garcia, a cofounder of B Academics, a group of 1,500 educators and researchers that study and support the sustainable business movement. “It provides very clear metrics.”

Hard to miss the founders values when entering the Los Angeles office of Techstars. “Each space has their own spin on it,,” said David Cohen, CEO and a co-founder of the tech accelerator that started in Boulder in 2006. (Provided by Techstars)

Boulder-based Techstars, which helps entrepreneurs build their startups, already has a well-known philosophy of “Give First” adopted by many in the community to give with no quid pro quo. For-profit Techstars opted to get B Corp certified anyway.

“It’s easy to say give first,” said David Brown, the Techstars co-founder who oversees global operations. “B Corp is a way of proving that to the outside world and demonstrating that we’re willing to put our money where our mouth is and go through the certification process, amending the corporate charter to have the values incorporated into being a B Corp and making the changes across the organization as necessary in order to get the certification.”

Financial returns and other impacts

As Karen Hoskin, CEO and co-founder of Montanya Distillers in Crested Butte, built her rum-making business, she did so to limit its impact on the Earth and treat employees right. 

But it took almost a decade to become a B Corp. When Hoskin finally prioritized it two years ago, she hired a part-time employee and made it her first project. It took six months. The company was ranked as one of B Corp’s Best for Environment and Best for Overall this year. The certification has helped distinguish Montanya Distillers from others, plus save money, said Hoskin, who now scours the B Corp directory as a shopping guide. 

Karen Hoskin (center), CEO and co-founder of Montanya Distillers in Crested Butte, bottles the limited edition Valentia rum on Nov. 19, 2019. Her company is certified B Corp, which means it values social impact along with making a profit. Valentia, which was made and bottled by women, is a tribute to women in the distilling industry. (Handout)

“I do think people overestimate how much it will cost to run an environmentally and socially responsible business,” said Hoskin, who just bottled the limited-edition Valentia rum with an all-female crew to celebrate the progress of women involved in the craft. “They’re doing only one side of the analysis which is how much is that going to cost me and rarely ever doing any analysis on how much is it going to save me. I feel like I’ve had more staff retention because of the sense of pride that my coworkers have around how we are distinguished as a force for good.”

Of course, a company doesn’t have to be a B Corp to do good. Golden-based PharmaJet, which makes needle-free devices to more efficiently administer vaccine shots in developing countries, has considered B Corp, but prioritized its mission first, co-founder Heather Potters said. 

“I have a private equity background, and because of my training felt like spending the time and money on having the (documents) in order and good corporate governance, with an extremely purposeful mission for the technology, would suffice for alignment with purposeful investors,” Potters said. “That continues to work well for us, as we have continued to raise money from (private investors) who are very interested in the combination of our mission and target of generating a solid return on investment for them.”

Rockies Venture Club has its own 30-point guide for determining impact investments. About half of the companies the group invests in are considered impact companies, though not all are B Corp. It looks for companies that actually have an impact with their business, not ones that sell $200 fleece jackets or $60 slip-on tennis shoes and then use the proceeds to support social causes. 

One of the Club’s investments is The Food Corridor in Fort Collins, which is not a B Corp. The tech company created a system to manage commercial kitchens that sit unused for a big chunk of the day or night. Home-based chefs can affordably lease out a kitchen for a few hours at a time to legally make food to sell. 

CEO and founder Ashley Colpaart said she was inspired by her mother, who made an award-winning hot sauce to sell at farmers markets. But lacking funds to scale and rent space in a commercial kitchen, her mom’s business didn’t get very far. 

“I saw firsthand that was a struggle for my personal family growing up,” Colpaart said. “But food businesses can be the easiest entry for the immigrant population, refugee population and women to start their own businesses. But oftentimes they hit friction points. The idea with Food Corridor is to democratize access to resources to level the playing field and allow for more success.” 

Impact investing is paying off, said Adams, with Rockies Venture Club.

“Instead of being a choice between profit or purpose, what we found in our research is that companies that are purpose driven are more profitable than those that are not,” said Adams, though it’s a small difference of “maybe a quarter point ” compared to its tech investments.

“The important thing,” he said, “ is it’s a little ahead as opposed to significantly behind, which I think is the assumption that a lot of people make about impact type investing.”

Not just small startups

The largest B Corp in the world happens to be based in metro Denver: Danone North America, with about 800 employees in Broomfield and Louisville. It’s a rather new company that was formed in 2017, after Paris, France-based Danone acquired WhiteWave Foods, known for its tofu, Silk non-dairy beverages and fridge-free Horizon organic milk.

WhiteWave was already a B Corp when Danone bought it. But Danone, which had about $27.3 billion in sales last year, apparently liked what it saw and committed the entire organization to getting B Corp certified, which is a work in progress. Danone North America, which is about 20% of the global business, is required by B Lab to be transparent about its operations. An annual report shares things like product recalls and how it dealt with three employee compensation lawsuits (it used technology and changed policies). 

Danone North America in Broomfield became the world largest B Corp in 2018, according to B Lab, which administers the beneficial certification. Parent company Danone is working on getting all of its regions certified. (Screenshot)

“This certification helps us differentiate, benchmark performance throughout our value chain, partner with peers, support our customers’ ambitions, connect with consumers, and attract and engage talent. It’s a way of doing business that’s better for workers, communities, the environment,” the company said in an email.

Danone isn’t the first corporate giant to consider B Corp. Multinational conglomerate Unilever bought the social-minded Ben & Jerry’s in 2000 even though the two founders didn’t want to sell but felt bound by their duty to shareholders. However, Unilever let the ice cream company remain independent as a wholly owned subsidiary. In 2011, Ben & Jerry’s became a B Corp, and Unilever has since committed to working with B Lab UK to suss out how larger companies can meet certification requirements. 

“What Unilever is doing now is they’re taking a strategy of actually buying benefit corporations. They bought Seventh Generation,” said Garcia, the DU professor. “Or they’re buying companies and allowing them to become benefit corporations. Unilever has this big vision in mind and this is from their CEO, it goes back to top down, that he would like to see Unilever become a benefit corporation.”

Other billion-dollar B Corp firms include Laureate Education, a network of 25 higher-ed institutions; Brazil-based Natura Cosméticos; and The Body Shop. Footwear maker Allbirds and online retailer Grove Collaborative also join Guild Education as B Corps with recent billion-dollar valuations, according to B Lab.

Nobody really keeps track of what companies leave the B Corp program or why, said Lichtenheld, with B Local Colorado. He estimates 25 to 30 have dropped out in Colorado in the past decade. 

“There is an annual certification fee. So, some companies choose not to recertify because the cost is prohibitive,” said Lichtenheld, whose day job is a certified financial planner at BSW Wealth Partners. “There are there are companies that become a B Corp for two or three years and it doesn’t feel like it’s a worthwhile investment. We still encourage their participation in our broader B economy.”

Sometimes companies let their certification lapse after getting acquired or going public. Rally Software, a Boulder firm that created its own Rally for Impact Foundation, dropped off the list sometime after getting acquired in 2015 by CA Technologies, which three years later was Broadcom Inc. 

Two years after going public, online handmade marketplace Etsy relinquished its B Corp status in 2017 because converting its corporate structure to a benefits company was “an untested process for existing public companies,” CEO Josh Silverman wrote in a blog post at the time.

New Belgium Brewing’s new hub at Denver International Airport’s Concourse B that features an elevated menu and a tap list with special offerings. (John Frank, The Colorado Sun)

It really depends on the new parent. On Tuesday, New Belgium Brewing, a B Corp since 2013, said it’s being acquired by Australia’s Lion Little World Beverages. The Fort Collins beermaker will no longer be employee owned business, but it’s keeping its B Corp certification at the insistence of its future parent, pending the sale’s close. 

“This will continue to be a key differentiator for New Belgium as part of the Little World family,” Matt Tapper, Lion Little World managing director, said in an email.

Guild Education became a B Corp in July 2017, less than two years after the company was founded. It has grown like a weed, doubling staff to 405 employees in 12 months. 

Being a unicorn hasn’t changed its mission. But the opportunity to grow faster made Carlson decide to invest in growth, after proving in the first half of the year that the business model can run profitably, she said. 

While maintaining B Corp certification is extra work, it’s “a codification of our values and our business model,” Carlson said. 

“We’d do it either way,” she said. “If B Corp didn’t exist, we’d make all the exacting choices we’ve already made. 


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