Weekend Briefing No. 327

Welcome to the weekend. I need to start with an apology. Last week, two of the most popular links were incorrect. Totally my bad! So, if you’re interested in the Starting Good virtual summit, click here. If you’re interested in keeping up with the YouTube content I’ll create, click here.

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Prime Numbers

1080—A Brazilian 11-year-old has become the first person to pull off a 1080—three complete turns—on a vertical ramp.

5—A 5-year-old boy stole the family car in an attempt to buy his own Lamborghini for $3. Then a man with a Lamborghini shows up at his house.

1—Garfield, 54, was patient zero at Providence St. Joseph Medical Center in Burbank, California, about 10 miles north of Los Angeles. He had a 1 percent chance of survival. And he beat the odds, leaving the hospital on Friday.

Durable Corporate Reforms

In a majority of American states today, the law explicitly allows corporate directors to give weight to the interests of not only shareholders, but other stakeholders such as employees, suppliers, community, environment and creditors. In reality, this rarely happens. The reason is simple: In none of those states do corporate boards have a “shall” duty to act with fair regard to workers, the environment and the community. As a practical matter, therefore, virtually all American public corporations are governed by rules that provide power only to stockholders and none to other stakeholders. So how is this legal impasse resolved? A recent innovation offers a sensible answer. Before the current moment, a movement centered on corporate purpose existed that went beyond rhetoric to develop a form of a business entity—the benefit corporation—that puts legal force behind the idea that a business should have a positive purpose, commit to do no harm, seek sustainable wealth creation and treat all its stakeholders with equal respect. The current pandemic’s negative effect for corporate stakeholders, such as workers, creditors and company communities, underscores the value of the Delaware benefit corporation model. The CARES Act’s short-term limits on stock buybacks, dividends and executive compensation for companies getting federal funding are understandable attempts to address the symptoms of the problem. A better idea would be to require conversion to benefit corporation as a requirement for government subsidies. Harvard Business Review (8 minutes)

Build Back Better

Last summer, these corporate chieftains and 178 others made a big fuss over affirming the Business Roundtable’s updated statement of purpose, declaring the end of shareholder primacy in favor of “stakeholder capitalism” that aims to create value for employees, suppliers, communities and others. For businesses in the midst of the COVID-19 crisis, build back better means making good on those commitments. Even very short-term evidence indicates that a more socially responsible approach might also be a more resilient approach. According to an analysis by Just Capital, companies that have prioritized workers and customers during this crisis are doing better in the market. Scholarly research in finance has shown that investing in corporate social responsibility (CSR) creates greater social capital (norms of trustworthiness and the propensity to reciprocate), which leads to greater resilience because being trustworthy is more valuable in times of uncertainty and upheaval. Fast Company (16 minutes)

Fishing With Dynamite

What is capitalism? The word inspires a diversity of passionate thoughts and opinions, often based on misconceptions and instances of corporate business gone wrong. Are corporations inherently greedy? Is capitalism inherently corrupt? What must we do to establish a just economic system and a thriving American democracy? Although capitalism was created as a fundamentally moral institution, there has long been a divide over whom it serves and how it benefits the economy and society. When profits become the priority over people and over the environment, capitalism can create unforeseen issues that threaten companies and their stakeholders: employees, customers, suppliers, community and shareholders alike. Fishing With Dynamite is a documentary film that explores the contentious history of American corporate culture. It explores the arguments of two influential theories—stakeholder vs. shareholder capitalism—and asserts through the extraordinary success stories of purpose-driven companies (Costco, The Container Store, Whole Foods) that caring for all stakeholders rather than simply driving value to shareholders is the only possible future for business in the 21st century. Today, I’m excited to present the world premiere of the trailer to the upcoming documentary. Fishing With Dynamite (Sponsored)

How to Spend PPP $

Entrepreneurs that received PPP funding have a few questions about how they should spend it. These are the top 10 questions: (1) How can I spend PPP money? (2) How long do I have to spend PPP money? (3) Are payroll costs calculated on net or gross? (4) Are payments to independent contractors forgivable under PPP? (5) Can I switch my independent contractors to employees in order to pay them with PPP money? (6) Do I need to maintain a certain number of employees to ensure that PPP is forgiven? (7) How should I track my PPP spending? (8) What is the application process for PPP forgiveness? (9) What happens if my PPP loan is not forgiven? (10) What is my risk of the SBA reviewing / auditing my company for taking PPP funding? I’ve answered each of these in my latest Forbes article. Additionally, if you have further questions, our firm is guiding people through the loan forgiveness process for a flat fee of $950. We’ve got a few spots available. If you’re interested, click here. Forbes (11 minutes)

Patagonia

Patagonia’s approach is being tested by the pandemic. Patagonia must balance the future of its business, which it acknowledges could shrink, with the health and financial well-being of its employees. The brand has long viewed its stores as community gathering places, where people can buy outdoor gear but also see documentaries, hear talks by environmental activists and get equipment repaired. Since closing, it has tried to connect with its loyal customers online with offerings like yoga sessions and “regenerative home garden classes.” But the retail industry has been devastated by the pandemic, and Patagonia is no exception. Its sales have dropped 50 percent in North America. Despite the steep business decline that Patagonia is facing, Patagonia’s CEO believes the brand will ultimately benefit as the pandemic encourages people, particularly younger generations, to “buy things that last.” The crisis has, in some ways, reminded people “of the value of wild and open spaces and clean air and clean water and if we can channel that to some good, all is not lost,” she said. New York Times (13 minutes)

Mannahatta

Before the first Dutch colonists sailed through the Narrows into New York Harbor, Manhattan was still what the Lenape, who had already lived here for centuries, called Mannahatta. Times Square was a forest with a beaver pond. The Jacob K. Javits Federal Building, at Foley Square, was the site of an ancient mound of oyster middens. Eric W. Sanderson, a senior conservation ecologist for the Wildlife Conservation Society, based at the Bronx Zoo, takes us on a virtual walk exploring Lower Manhattan. We start where the Staten Island Ferry docks at Whitehall Terminal. Except that we imagined it was the September afternoon in 1609 when Henry Hudson arrived, and we were standing near the shore, gazing at the water. New York Times (13 minutes)

Telephone

This video for the song Telephone from The Brilliance is simple and powerful. The song is about loss during the Coronavirus. The visuals follow a healthcare working dancing in the empty streets of LA. Check it out. YouTube (3 minutes)

Bookshelf

The Overstory by Richard Powers is the best novel ever written about trees, and really just one of the best novels. Period. The Overstory, winner of the 2019 Pulitzer Prize in Fiction, is a sweeping, impassioned work of activism and resistance that is also a stunning evocation of—and paean to—the natural world. From the roots to the crown and back to the seeds, Richard Powers’ twelfth novel unfolds in concentric rings of interlocking fables that range from antebellum New York to the late twentieth-century Timber Wars of the Pacific Northwest and beyond. There is a world alongside ours—vast, slow, interconnected, resourceful, magnificently inventive and almost invisible to us. This is the story of a handful of people who learn how to see that world and who are drawn up into its unfolding catastrophe. Amazon

Most Read Last Week

The Great Realization—This is a bedtime story of how the coronavirus changed the world, how it might change our perspective and why hindsight’s 2020. Get your tissues ready.

Kyle’s YouTube Channel—Subscribe here for some good upcoming content.

Starting Good—Over the span of 10 days in May, world-renowned social entrepreneurs, changemakers and innovation leaders are gathering virtually to talk about creating a lasting positive impact in the world.

About the Weekend Briefing

A Saturday morning briefing on innovation & society by Kyle Westaway—Managing Partner of Westaway and author of Profit & Purpose. Photo by Patrick Hendry.

Should We Work Together?

This newsletter is my passion project. I hope it helps you gain deeper insight and equips you to create meaningful impact in the world. Many readers have asked about how we can work together. I run a law firm for startups. We try to keep things simple by offering transparent flat fees. We structure our engagements in two ways: (1) Per-project flat fee engagements. No billable hour means no surprise legal bills. (2) General Counsel—A simple monthly fee for all your day-to-day legal needs. It’s like getting a subscription to your own general counsel. If you’re interested, let’s jump on a call to see if you’re a good fit for the firm. Click here to schedule a call.

Weekend Wisdom

Shareholder value is the dumbest idea in the world. Jack Welch

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