On Couchsurfing becoming a B Corporation: the controversy

While you can’t please all of the people all of the time, anyone who runs a community-based website knows that their business can live and die on the goodwill of superusers. The CouchSurfing protesters have eleven demands, mostly focused on greater transparency and getting more information about how the site might be more heavily commercialized. Will they get what they want? *

Here is a first entry into the debate rocking the Couchsurfing community, via Shareable:

Excerpted from Malcolm Harris:

“Let’s imagine the standard start-up route and we’ll see the kind of double-bind CouchSurfing is in. You start with a good idea, attract high-value employees cheap with equity offers and big investment cheques, you hit the Initial Public Offering (IPO) and everyone gets paid, then if you’re lucky, a bigger company will try and buy you for even more money. CouchSurfing wants to attract the high-level programming talent and investment capital that comes with a good idea (and is necessary to realizing that idea), but they don’t want to risk losing control of the organization’s mission to shareholders. What’s an ethical start-up to do?

What CouchSurfing did is register as a “B corporation.” B (or Benefit) Corporations compose a new class of US corporations, dedicated to social as well as financial good. Five states have passed laws governing B corps, and a bill is moving in California now. Although there are other benefits, the biggest one seems to me described on the B Corp site: “As a B Corporation, founders and other mission-driven shareholders can hold directors accountable to consider the impact of operating and liquidity decisions not only on shareholders, but on all stakeholders.” By building responsibility and accountability mechanisms into the founding of the corporation, the B Corp framework seems substantially different than the “corporate responsibility” cons.

As part of the B incorporation, CouchSurfing accepted $7.6 million in venture capital funding, something they never could have done previously as a non-profit. Combined with the site’s already 3 million-large membership base, the site seems ready to take it to the next level. However, the directors maintain CouchSurfing will always be free for participants. Here’s hoping the B Corporation framework helps them, and maybe provides a model for start-ups facing the same conundrum.”

Robino on the Community conflict over the new status:

“Couchsurfing as I see it has almost nothing to do with this what you call collaborative consumption Malcolm. It is about doing away with that model of production and consumption. It is hospitality. It is allowing a stranger to be your guest. It is l-i-f-e. It is sharing your life with someone for maybe a day, maybe a couple of days, and sometimes even longer. For many of these people, traveling is NOT a product, neither is hospitality, neither is sharing. It is how we live.

That’s why there is no money involved, that’s why they like non-profit, this is why many members inside the community are currently so upset. Because we want to do it the other way: without the profit, without the money. And because we know it can be done.

Couchsurfing though never wanted to make the step to transform the organization into a democratically run organization, or to make the source-code of the website available for people to hack on it. They said they wanted it to become a charity (for tax-purposes) but never got that up and running either, and after years of inaction and numerous expensive retreats, decided to go for a “sell-out”, when their member-base was finally big enough.

Around 90% of CS-members probably don’t really care about that. They just want to have a good website to find hosts and guests, but the others (the ones who speak up the most) do care about it. They are critical about their data that has just been sold to a new corporation. Their data, their profiles, their personal references, their personal information, their friends that they once provided to a non-profit association and not to a corporation with CEO’s and investors.

Having said all this, we’ll see where this goes, and how it will affect the networks. For one, the success of Couchsurfing really depends on people like me who are “active hosts” inside the big touristic cities. And with this enormous growing member-base of Couchsurfing that we’ve seen for the past years, it has become really hard for these hosts to keep up with the amount of requests they get. And this announcement of Couchsurfing turning into a profit-organization (why is that legally allowed anyway?) might be a final drop for quite a few of them.”

More Information:

* Original pressrelease

* After going for-profit, CouchSurfing faces user revolt

3 Comments On Couchsurfing becoming a B Corporation: the controversy

  1. AvatarMichel Bauwens

    The 5-year sage of Couchsurfing purposely misinforming the community continues:
    Couchsurfing: “This structure legally allows us to put our ideals
    before our profits.”
    (try to read that sentence again).

    And yet Couchsurfing is not even a registered Benefit Corp
    (http://en.wikipedia.org/wiki/Bcorp), but still a normal C-corporation
    http://www.bcorporation.net/index.cfm/fuseaction/company.report/ID/5e086197-f44e-4448-9519-5e35d5bde1e2

    Corporate Structure: C Corporation
    Ownership: Private

    See als: B Corps is Not a New Legal Form
    http://charitylawyerblog.com/2011/01/15/b-corps-is-not-a-new-legal-form-by-keren-g-raz/

    See also the discussion on the CS-group
    http://www.couchsurfing.org/group_read.html?gid=45507&post=10059584

  2. AvatarMichel Bauwens

    via Dante Monson:

    the point you make about couchsurfing being a “corporation” – albeit with a B “certification” – and not a “benefit corporation”, does make a big difference indeed,
    so much so I feel like underlining it – quoting from the article you mention :

    http://charitylawyerblog.com/2011/01/15/b-corps-is-not-a-new-legal-form-by-keren-g-raz/#ixzz1XCmd10l9

    “The key difference is that the law requires a third party assessment ( for a “Benefit Corporation”),
    whereas B Corps is – only –
    a certification.”

    “Why the difference is significant:

    • One can be a B Corps and yet be incorporated legally as a C corporation, an LLC, even a sole proprietorship. In other words, a company can be certified as a B Corps without ever incorporating as a benefit corporation

    • One can be a benefit corporation under Maryland law without being a B Corps. The Maryland law does not require that benefit corporations be certified as B Corps. Rather, it requires that benefit corporations’ social and environmental performance be assessed by an independent third party that makes publicly available or accessible the following information:

    1. The factors considered when measuring the performance of a business;
    2. The relative weightings of those factors; and
    3. The identity of the persons who developed and control changes to the standard and the process by which those changes were made.”

Leave A Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.