Jay Coen Gilbert was celebrating New Year’s Day in 2005 at his colleague and friend Bart Houlahan’s house when he broke some unexpected news.
After completing the sale of AND1 — the basketball-apparel company Coen Gilbert cofounded and Houlahan helped lead as chief financial officer, chief operating officer, and president — he was going to start an organization that would allow companies to apply for a designation that would publicly hold them accountable for the ways they benefitted workers, communities, the environment, and customers.
Shareholder primacy, where a stock price can benefit at the cost of everything else, leads to a toxic short-termism, Coen Gilbert believed. He found it to be a fundamentally flawed concept, and his movement was designed to help decrease its hold over society.
Houlahan’s reply was basically, “Dude, what the f— are you talking about?”
“And then I had realized what I had said — like wow, that is a pretty big thing to just lay on somebody on New Year’s Day without any warning!” Coen Gilbert told Business Insider, laughing.
This idea would mature into the notion of B Corporations, where the B stands for “benefit.” Companies going through the B Corp process would be overseen by the company B Lab.
After months of discussion and planning, Houlahan decided that after they sold AND1 to American Sporting Goods in May 2005, his friend’s ambitious idea would be worth pursuing. They brought on Andrew Kassoy, a Wall Street connection, and launched B Lab the next year.
Today, there are 2,655 Certified B Corporations across 60 countries, and they include Danone North America, Patagonia, and Amalgamated Bank. Companies can also apply to be legally recognized as “benefit corporations” in 34 states and Washington, DC, as well as in Italy, with other countries considering legislation.
Coen Gilbert doesn’t see his movement as a charitable act, but a participant in a major shift in how businesses are run.
“As we go forward in the 21st century, people will look back and say, ‘I can’t believe they tried to run an economy where the only interest that mattered was the interest of shareholders,'” he said.
A personal journey
When Coen Gilbert’s friend Seth Berger, a lifelong basketball fan, told him in the early ’90s that his solution to avoiding a traditional finance path after business school would be by starting a specialized basketball-apparel brand, it seemed like a fun idea.
Coen Gilbert had enough of a financial cushion that if the project failed miserably, he’d be able to work his way back onto Wall Street. Instead, the brand, AND1, reached an audience, inked NBA deals, and most famously became linked with the top performers in amateur streetball competitions.
By 1999, Coen Gilbert had reached a level of financial success where, though still focused on AND1, he began considering options for what could come next. A turning point came in the fall of 2001. He went through the stress of knowing that his sister worked in downtown Manhattan during the 9/11 attacks, and he learned she was pulled to safety from debris by a first responder. Four days after that, their dad died from lung cancer. And then two weeks later, one of his AND1 team members died in a car accident on his way to work.
The sadness he felt made him think about his own mortality, and “that triggered a pretty intense period of reflection on what’s the highest and best use of my life,” he said.