Why Veeva Became a Public Benefit Corporation

This video features Veeva CEO Peter Gassner discussing the company's landmark decision in 2021 to become the first public company to convert to a Public Benefit Corporation (PBC). The primary purpose of the conversion was to formalize Veeva’s commitment to all stakeholders—employees, customers, and the community—rather than solely prioritizing shareholder profit, which Gassner felt was the overly simplistic mandate of traditional corporate governance. He contrasts the standard articles of incorporation, which focus narrowly on making money and avoiding illegal activity, with the broader ethical responsibilities inherent in running a large, impactful company within the life sciences sector.

Gassner explains that the concept of the PBC resonated with his personal ethos, which was heavily influenced by his experience working in his father's small machine shop. He learned early lessons about quality ("If you have to ask me, it's not good enough") and the absolute necessity of customer focus, noting that small businesses inherently must take care of their customers and neighborhood because they lack an external safety net. This foundational belief informed his desire to ensure Veeva's internal ethos and way of working matched its legal charter. The PBC structure achieves this by legally mandating attention to all stakeholders, embedding these values directly into the articles of incorporation.

The formalization of the PBC structure serves multiple critical functions for Veeva's long-term durability. Firstly, it provides an efficient way to communicate the company's values and mission to a large and growing base of employees and customers. Secondly, and most importantly, it establishes a legal obligation and sets the tone for future leadership, board members, and executive teams. Gassner emphasizes that the PBC status ensures that stakeholder responsibility is "not just my opinion anymore," but a codified rule. This grants employees a formal "seat at the table," making their well-being part of the board's legal duty. Despite initial fears of unknown downsides associated with being the first public company to convert, Gassner reports only positive outcomes, including attracting mission-aligned employees, deepening customer relationships, and, crucially, increasing the source of new ideas. The shift in focus allows the company to first ask, "What can we do that's aligned with our values?" and then double-check the idea against the business purpose, rather than the reverse.

Key Takeaways:

• Formalizing Ethics through Governance: Veeva’s conversion to a Public Benefit Corporation (PBC) was driven by the need to align the company's internal ethical ethos with its legal corporate charter, moving beyond the traditional, narrow focus on shareholder profit maximization.
• Stakeholder Responsibility as a Legal Duty: The PBC structure legally obligates the company's board and leadership to consider the interests of all stakeholders—employees, customers, and the community—not just shareholders, fundamentally changing the fiduciary duty.
• Enhancing Employee Value and Retention: The PBC status ensures that taking care of employees is a legal duty of the board, effectively giving employees a formal voice and "seat at the table," which helps attract talent aligned with the company's values.
• Durability and Succession Planning: Formalizing values in the articles of incorporation ensures that the company's mission and commitment to stakeholders persist beyond the tenure of current leadership, setting the mandatory rules for future executive teams and board members.
• The Power of Quality and Customer Focus: CEO Peter Gassner’s foundational lessons from his father's small business—particularly the mantra "good enough is not good enough" regarding quality, and the necessity of deeply caring for customers—are the ethical roots of Veeva's corporate philosophy.
• Increased Source of Innovation: The shift to a PBC has positively impacted innovation by changing the idea generation process; instead of starting with business growth and then checking values, the company now starts with value alignment and then checks business viability.
• Communication Efficiency: Writing down and formalizing values in the corporate charter is presented as a highly effective way to communicate the company's mission and expectations efficiently to a large, dispersed workforce and customer base.
• No Reported Downsides: Despite being the first public company to make this conversion, Veeva experienced no negative repercussions; instead, the expected positives—deeper customer relationships and better talent attraction—were realized.
• The Contrast with Traditional Charters: Gassner critiques traditional articles of incorporation as "overly simplistic," often boiling down to "make money for shareholders and don't do anything illegal," which he found misaligned with a broader sense of corporate responsibility.

Key Concepts:

• Public Benefit Corporation (PBC): A type of for-profit corporation that is legally required to pursue a general public benefit in addition to maximizing shareholder value. It integrates social and environmental considerations into its decision-making process.
• Stakeholder Responsibility: The ethical and legal obligation of a company to consider the interests of all parties affected by its operations, including employees, customers, suppliers, communities, and the environment, not just its owners (shareholders).
• Corporate Governance: The system of rules, practices, and processes by which a company is directed and controlled. Veeva's conversion represents a fundamental change in its governance structure.