It will probably be at least a few years before Hampton Creek, the plant-based food startup known for its vegan mayo, goes public. But founder Josh Tetrick already has plans for doing good with the money he makes when that happens.
"The whole company is based around using capitalism to make things a bit better," says Tetrick. "The idea that I could use whatever personal wealth that I might accrue from this to also do good . . . that's what I want to do with my life."
Tetrick is one of around 200 founders to take the Founders Pledge, a legally binding contract that says when a founder exits their company, they'll give at least 2% of the proceeds to charity (some pledge as much as 25%).
The pledge, part of the U.K.-based nonprofit Founders Forum for Good, started after director David Goldberg had run another program giving money away to social entrepreneurs in the tech space. Many of them, unfortunately, weren't great at running businesses. So he decided to shift tactics.
"The thinking behind Founders Pledge was, if we can't help the people who care most be better at being businesspeople, why don't we help the best commercial entrepreneurs be more socially responsible?" Goldberg says. "It was really just sort of flipping the equation on its head and saying, let's work with a different caliber of entrepreneurs, and make it really easy for them to give back and do good."
A handful, like Tetrick, also happen to run socially minded businesses. But most just have thriving startups. "We kept seeing entrepreneurs selling their businesses for hundreds of millions of dollars, and then not having any clue what to do with it," Goldberg says.
Most do give away at least some of their money, for tax reasons if nothing else. But Goldberg realized that they could do it in a more strategic way—using the principles of effective altruism to support the nonprofits that can help the most people—and that they could start thinking about it earlier.
"From the moment you start your business, you should be thinking about what do I stand for, how can I do good through this?" Goldberg says. "That doesn't mean it has to occupy 100% of your time [and] consume you, but it should be something that every single entrepreneur thinks about in the very earliest days."
"It is easy for entrepreneurs who have made money to act altruistically, but there are the vast majority who want to make a difference but simply don’t have the means yet," says Andy McLoughlin, cofounder of the tech company Huddle. "The pledge allows entrepreneurs at any stage of their business to commit to giving back to the cause of their choice. And as the model only relies on them giving up a tiny stake of their own return—and thus doesn’t need to touch the cap table of the business or any other messiness—it’s simple to set up."
The process of making the pledge takes about two minutes. Later, the organization helps founders decide what to do with their money. The Founders Pledge doesn't take a cut; 100% goes to whatever charities the person wants to support.
They hope it becomes standard for every startup, though they're most focused on tech companies. "Tech tends to have the most forward-thinking entrepreneurs," Goldberg says. "We tend to see larger exits in tech on a shorter timetable, so there's more liquidity. And people are more willing to consider this because by nature of what they do with technology, they want to change the world in some way."
To date, 199 people have pledged, representing over $69 million that will be eventually be given away (the number may be larger as valuations grow). By the end of the year, they expect to have about 2,200 pledges, worth $270 million. Goldberg hopes other founders take inspiration from their peers.
"We just saw Mark Zuckerberg give 99% of his equity to charity," he says. "Say what you want about how it was structured, but I don't know any founder who's done anything like that other than Bill Gates. I think it's pretty powerful. If Zuckerberg can give 99%, then why can't everyone else give 2%?"