Eric Korman is the founder and CEO of Next Coast Ventures portfolio company PHLUR, a sustainable fragrance and candle brand.
What does it mean to be certified as a B Corp?
Well, since the start we made sure our sourcing decisions were made in alignment with the International Union for the Conservation of Nature, and we’ve had a give back program certified by 1% for the Planet, so now with the B Corp certification, we are further cementing our values as part of our corporate DNA. At a high level, a B Corp means optimizing your business by taking a multi-stakeholder approach to all your decisions instead of the traditional approach of only considering your shareholders as stakeholders. The interesting element of becoming a B Corp, is that by actually considering all of your stakeholders when you make business decisions, you ultimately create businesses that have higher returns to investors. Being certified also provides great partnership opportunities for like-minded organizations and targeted marketing opportunities to reach our customers.
At a lean startup with finite resources, how do you maintain a commitment to sustainability and transparency while still scaling a business?
To start, we made sure at least one of our founding team members had a deep background in sustainability and socially responsible practices. Part of her broadly-defined role was serving as goalkeeper to ensure that the decisions we were making upfront tied back to those values in the DNA of the brand. On a more ongoing basis, we’re taking the practices and the bones that she put into place and ensuring as we launch new products or look at a new partnership that we’re doing so through the same framework that she established. That doesn’t mean we don’t run into issues. Having values and intent doesn’t necessarily mean you’ll have all those priorities in practice on day one. You have to balance competing interests, and that’s what being a B Corp is about – considering all stakeholders does not imply satisfying all of them at once – that’s impossible. It’s simply going through the process of always trying to balance each individual decision in the best way possible, so that as a whole, things add up the right way.
Why do the extra legwork to become a B Corp?
It’s not a lightweight process, and as a startup we have plenty of things to do, so it certainly wasn’t going to be a day-one activity, but a couple of years in we felt that we were ready to undertake the certification. Ultimately, it adds a special halo to your brand, and speaks loudly to a specific group of potential customers. Customers who principally purchase from brands that are aligned with their value sets. Values such as sustainability, transparency and giving back to the community. If one of your goals is to be able to serve that constituency, I don’t think you can fake your way there. It doesn’t mean you necessarily have to be B Corp certified, but I do think it means consistently applying some specific values lens in everything that you’re doing that is going to ultimately touch the customer. We all fight so hard to acquire every customer that the last thing you want to do is lose a customer because something was very different than the way you positioned it originally. Do not get caught in those inconsistencies because the customer will ultimately figure it out.
What does it mean in practice to take a ‘multi-stakeholder approach’?
Essentially it means that you’re taking any decision as a business owner and looking at it as: How will this impact things like customers, our associates, team members and our community at large? That community can be the environment, or a community you’re physically part of, but it’s all the partners that you engage with as a business. So not only do you have to make decisions that collectively think about all these stakeholders, but you have to be transparent about how you make all those decisions, because by definition there is always going to be trade-offs.
What’s an example of how the B Corp certification process gauges your commitment to transparency?
One of the questions the B Corp certification process asks you is if you share your financial performance with all members of your organization – from entry level on up. Many organizations obviously don’t, the top leadership understands the company’s performance and nobody else has a full picture. While traditionally sharing that level of information was not done out of some misplaced fear, in reality sharing that information helps team members perform their roles better. Fundamentally, I believe team members perform better when they have context. And it’s simplest level, folks all across the organization need to make decisions without your involvement. How can they do so if they don’t even understand the basic financial structure and recent results of the business? Everything B Corp stands for ultimately goes back to how do you build a more creative and effective organization, which often is refreshingly the opposite of f typical business management conventions in a top-down, hierarchical structure.
How do initiatives like your give back program further your B Corp principles?
So interestingly we do not shout from the rooftops about our give back program. There are many customers who have no idea we have one, and we’re not spending a lot of time trying to change that aspect. Rather I believe the give back program is important as a grounding value of our company, and as we grow our team, I know it will be an important elements in terms of how we compete for talent at scale. It’s a great example of the multiple stakeholder approach. Because clearly giving back literally means were lowering our margin structure, but we believe it helps us attract better talent, which in turn helps us perform and compete better. I think employees want to be part of organizations that are giving back and are part of the community, there are countless studies that show that employees are driven to perform at their optimal level by elements that go well beyond simply cash compensation.
Eric is the founder and CEO of PHLUR, a vertically integrated fragrance retailer and Next Coast portfolio company. He is the former president of Ralph Lauren Digital and Global E-Commerce where he was responsible for the company’s digital businesses. Prior to Ralph Lauren, Eric was president of Ticketmaster Entertainment Inc. where he was part of the management team that drove the successful public spin-off of Ticketmaster from IAC (InterActiveCorp) in 2008. He later helped lead the merger of Ticketmaster with Live Nation. Previous to Ticketmaster, Eric was a strategy and corporate development executive at IAC. Eric has served on the Board of Directors of Points International (PTS), Active Network Inc., BET Digital and OpenTable Inc. (OPEN). He received his MBA in finance from the J.L. Kellogg Graduate School of Management at Northwestern University and his B.A. in economics from Emory University.