
RStudio becomes a public benefit corporation - hadley
https://blog.rstudio.com/2020/01/29/rstudio-pbc/
======
newfeatureok
It's great that RStudio is changing to a PBC. However from what I've read,
being a Benefit Corporation doesn't actually mean anything.

\- From my reading it's possible for a Benefit Corporation to still be taken
over or bought out.

\- Benefit Corporations can convert back to regular corporations (in contrast
with most 501(c)3's which cannot convert to corporations except under _very_
particular circumstances)

\- Unlike a 501(c)3, the charter of a Benefit Corporation is not legally
binding

It's not to say that being a Benefit Corporation is bad (or good), but rather
to say that it's kind of meaningless. I believe people should judge a _for
profit_ company, which a Benefit Corporation is, by its leadership, not
necessarily by its legal designation.

Fortunately the leadership at RStudio have made themselves trustworthy, at
least by the fact that they're relatively transparent and most of their stuff
is open source. I'd be curious to know why they just didn't become a non-
profit. I assume the main reason is because they want to be able to raise
capital more easily.

Source: [https://corpgov.law.harvard.edu/2012/05/13/benefit-
corporati...](https://corpgov.law.harvard.edu/2012/05/13/benefit-corporations-
vs-regular-corporations-a-harmful-dichotomy)

~~~
scottmmjackson
Disclaimer: I'm an RStudio employee. But this post is my personal opinion and
not representative of that of RStudio.

Separately, I'm also a licensed (non-practicing) attorney; despite that, this
isn't legal advice.

Some of the things you've said are correct, but are kind of skipping a few
important steps.

Buyout: Any corporate buyout, particularly of a Delaware corporation, opens
the board up to scrutiny and requires the consent of the corporate
constituency. In JJ's presentation he cited Revlon which is an example of a
dispute over a buyout by a major shareholder. So, yes, technically benefit
corporations can be bought out, but they must approve of the buyout using the
corporate governance rules of a benefit corporation.

Converting to a benefit corporation isn't easy- you pretty much require
unanimous shareholder consent and it's fairly close to the amount of consensus
you need to convert to a pure nonprofit. Same with converting back to an "any
lawful business purpose" corporation. So again, yes it's possible, but it's
very unlikely unless something convinces basically everyone with a stake that
it's worthwhile.

I'm not sure where you're getting that PBC status is not legally binding- I
didn't see anything like that in the Harvard link. Corporate purpose
statements have a very real legal effect. Would you mind explaining more about
this statement? I want to make sure I'm not mistaken.

Note that the article you cite was written a year before the Delaware Benefit
Corporation Law was signed by the governor- so some of the things it says
might be a little speculative based on the legal realities at the time.

If you want to learn more in depth, I can recommend "Benefit Corporation Law &
Governance" by Frederick Alexander.

~~~
nathancahill
Thanks for the thoughtful comment. It's an area I have been very interested
in. Will look at that book.

------
hyperenergy
It's interesting that many tech/product blogs do not easily link back to the
parent site.

For instance, I didn't know what RStudio was, so I have to go to the address
bar and remove the blog portion of the subdomain and the trailing url just to
find out what the parent site is, instead of a simple link.

~~~
hadley
Doh - I filed an issue on our internal tracker to fix this

~~~
brewdad
Thanks for the quick response to this. The "blog that doesn't link back to the
main site" might be my biggest pet peeve on the internet today.

"Pet peeve" being a minor but incredibly annoying issue as opposed to a deal-
breaker type of issue.

------
omarhaneef
I wonder what this means.

I have benefited a lot from R, Rstudio.

But what impact does this have? Are there legal remedies now available to
users if they feel Rstudio has strayed from the charter?

fwiw, I have the impression that the team there is quite civic minded, so this
is really a question about the law, and not some sort of implication about
their motivation.

~~~
larrydag
My belief is that instead of being shareholder focus that RStudio, Inc. is
going to be customer and end-user focused. I'm not sure how this is held
accountable. I suppose in the near term it would be a public relations form of
accountability. I suppose in the future there could be some other forms of
accountability such as licensure of software.

[https://en.wikipedia.org/wiki/Benefit_corporation](https://en.wikipedia.org/wiki/Benefit_corporation)

~~~
omarhaneef
Don't all entities-- public benefit corporations or otherwise -- experience
"public relations form of accountability"?

~~~
larrydag
Yes of course. Yet usually it's focused on their product or service and
profitability. I'm guessing since a public benefit corporation would have a
different focus that is more end-user facing.

------
jawns
Public benefit corporations sounds nice -- at least on paper. But ultimately,
PBCs still tend to have a bunch of outside shareholders who are expecting to
make a profit eventually.

What I'd really love to see is more organizations considering a cooperative
structure.

Cooperatives are 100% owned by their members (in the case of consumer
cooperatives) or workers (in the case of worker-owned cooperatives). There are
no outside shareholders, and so the pursuit of profit is not the ultimate
goal; the happiness of the owners is. That certainly doesn't preclude making a
healthy profit, but it does preclude short-sighted moves that eek out a
temporary profit at the expense of the broader business.

Most people don't realize how widespread cooperatives already are. Every
single credit union in the United States is a cooperative. Many insurance
companies are cooperatives. The ShopRite chain of grocery stores and REI
outdoor stores use a cooperative structure.

Of course, the downside is raising capital. But sometimes taking on debt is
enough, and cooperatives can flourish in a variety of industries.

~~~
toomuchtodo
To add to your examples, Publix is one of the largest employee owned grocery
stores in the US, and Vanguard is the largest mutual brokerage owned by its
investor customers. It can be done!

------
qchris
It's interesting to see an organization like RStudio decide to change their
status to a public benefit corporation, plus go through the process of
becoming a certified B Corp. The nature of a PBC, in having more latitude to
consider actions that don't necessarily build shareholder value as their
primary concern, certainly seems to line up well with its open-source roots.

I've tended to associate PBCs with companies like Patagonia, Ben and Jerry's,
etc.--ones that make physical things, rather make software (which seems more
like intellectual property, to a degree? Mostly relevant in terms of material
cost of reproduction). I'm curious to see what kind of impact this will have
on their operations and direction, and if it might lead to a similar trend
with other open-source-based corporations like Gitlab or Elastic.

~~~
ianbooker
I think this is also a very rational move. IDEs and tooling is just
participial about actual performance of said software, but also about the
culture and community it is embedded in. So going for a long term commitment
to open source is a strong signal to users and other stakeholders.

Bringing up Gitlab in this regard is a very good point, especially after MS
bought Github..

------
amrrs
@hadley Your response to the tidyverse question was quite candid. Thanks for
that! Hopefully Rstudio becoming PBC helps a lot of skeptists to support more!

~~~
j88439h84
Where is that?

~~~
data_ders
CTRL+F for hadley. He's all over that thread.
[https://news.ycombinator.com/item?id=20362626](https://news.ycombinator.com/item?id=20362626)

~~~
minimaxir
Huh, that's my thread; didn't realize Hadley had commented on it. (also that
thread is a reminder why I don't talk about tidyverse on HN anymore)

------
H8crilA
Is the AGPL going away?

Under some interpretations - data generated in RStudio poisons whatever
software project is using it, like GPL does with dependant code.

~~~
jmcphers
No, RStudio will remain AGPL licensed.

------
m_c_g
My head is spinning. I am certain I heard about this weeks ago. I don't think
it was through a backchannel or a rumor mill—I thought I had read something
official about it. In fact, I've spoken to people several times about it, most
recently yesterday. And when they expressed surprise, I went looking for the
official announcement, and I couldn't find one.

Is it possible that RStudio Inc. made a soft announcement that they later
pulled for re-tooling? Or perhaps my memory is faulty and I did just hear
about it through a back channel. Obviously this is something that takes time
to plan and execute so it has been in the works for awhile.

~~~
trestletech
The legal change happened last year but it had been kept under wraps until
today. Employees did know in advance, so it could have leaked.

------
mikorym
IMO the main contribution of RStudio is not RStudio itself (the IDE) but their
general support of the R language. I think that this dynamic scene where R is
still an evolving language is the true value.

I don't actually use RStudio itself (hurray for vim). Tidyverse is the obvious
example of their contributions, but I don't mean just tidyverse (actually,
there are some things that I don't like that much, like tibbles) [1]. I think
a language like R really needs this kind of support due to its mantra: for
statisticians, by statisticians. By that I mean that you should be able to get
insights by sometimes only writing a handful of lines of code.

The ease of use of R, good libraries, nice graphs, and so forth is why I
happily code in both R and Python.

[1] It seems like here is another thread about some objections to tidyverse:
[https://github.com/matloff/TidyverseSkeptic](https://github.com/matloff/TidyverseSkeptic).

------
simmanian
Can someone explain to me how PBCs are structurally different than "regular"
for-profit corporations? What's stopping them from turning "evil?"

~~~
kube-system
Traditional corporations in the US are legally required to maximize
shareholder profit.
[https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co](https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co).

A PBC is allowed (but not required) to make decisions that benefit the public
but might not be beneficial for shareholders.

~~~
vonmoltke
> Traditional corporations in the US are legally required to maximize
> shareholder profit.
> [https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co](https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co).

They absolutely are not, and _Ford v. Dodge_ concerned the rights of
shareholders, in particular minority shareholders, to not have the value of
their positions _intentionally_ devalued through actions of the corporation's
management. In fact, in the first sentence of the very article you posted:

> At the same time, the case affirmed the business judgment rule, leaving Ford
> an extremely wide latitude about how to run the company.

As noted in the "Significance" section, value maximization is a legally-
unprovable standard.

~~~
kube-system
I was summarizing in as plain of English as I could in a single sentence.

Also from that page:

> This case is frequently cited as support for the idea that corporate law
> requires boards of directors to maximize shareholder wealth.

[...]

> However, others [...] found that it was an accurate statement of the law, in
> that "corporate officers and directors have a duty to manage the corporation
> for the purpose of maximizing profits for the benefit of shareholders" is a
> default legal rule

------
halfeatenpie
Excited about this!

------
jacobwilliamroy
What is a public benefit corporation legally? What kind of tax forms do they
fill out?

------
chadlavi
Welcome to the club!

------
Ericson2314
I would have more faith in the concept of "public benefit corporations" if it
meant that e.g. Kickerstarter was prevented by its charter from suppressing
the self-organizing of its workers.

