How Change.org taps into the crowd
FORTUNE — Change.org isn’t a nonprofit, but the company’s CEO Ben Rattray isn’t interested in maximizing returns, either. For Rattray and his six-year-old company, which hosts online petitions geared toward social and political change, the end goal is empowering citizens, not making gobs of cash. With more than 35 million users worldwide targeting problems from obtrusive credit card fees to bullying in schools, Change.org has put a 21st century spin on an otherwise old-school form of social activism. Fortune’s Adam Lashinsky interviewed Rattray to discuss the company’s business model, the impact of petitions on big business, and the future of online petitions in politics. A lightly edited transcript follows.
Adam Lashinsky: So, what is Change.org?
Ben Rattray: Change.org is the world’s largest petition platform that allows anyone anywhere to start a petition around an issue they care about. About 35 million users around the world and making daily change around government policy and the practices of companies.
Adam Lashinsky: So let me back you up. A petition is something that—until you came along—I might be asked outside my grocery story, someone might approach me with a clipboard and say, “Sir, can you please sign this petition?” right?
Ben Rattray: Yeah. Historically it’s one of the oldest tools in advocacy. This goes back hundreds of years to publicly add your name in support with others called for change. And what’s different now is it’s just dramatically easier than ever before to start petitions and to spread them through social media. And so what’s happened over the past couple years, the reason for the huge explosion of citizen campaigns online is because it’s so much easier to start and spread them.
Adam Lashinsky: So tell me the history of Change.org.
Ben Rattray: We started the company about six years ago. And we tried initially to build a ton of tools for nonprofits and individual activists to advance change around fundraising, volunteering, advocacy. What we found was the simplest things [are] actually most effective at empowering people best. And so petitions ended up being the simplest, but actually the most powerful way of mobilizing for change.
Adam Lashinsky: What’s so good about an online petition versus the old-fashioned kind? One drawback I would think of is that the petitioner doesn’t have any direct interaction with the petitionee.
Ben Rattray: I think what’s most powerful in getting people to sign a petition is [it’s] the beginning but not the end of the movement you’re building. And so you have this ability to immediately follow up with those who sign your petition to ask them to take further action. And it’s that ability to have sort of access to what we call micromovements that makes these so powerful.
Adam Lashinsky: There is a virality, I assume, in online petitions that doesn’t exist in the offline petition world.
Ben Rattray: Yeah. And so what you see now is because people all have these basic microphones, they’re able to spread to their networks. And when you take action, it’s not in solitude, it’s not by yourself on a street corner, but it’s actually an immediate recognition of your surrounding community. And these go viral. How petitions start, they get hundreds of thousands of signatures in a matter of days in a way that was never possible before.
Adam Lashinsky: Tell me about a successful petition drive that someone used Change.org for.
Ben Rattray: One of the first and most successful campaigns around companies was actually [targeting] Bank of America. It was about a year and a half ago. Bank of America announces after being bailed out by the American public, they’re going to add a $5 fee to use your own bank card. And then you got a huge amount of online social media, negative response, but no effective coordination until a 22-year-old part-time nanny, [who] had no history in activism at all, starts a petition, [and] gets 300,000 people to join her. She mobilizes people offline and they pull money out of Bank of America. She’s all over the media. And then after a month of campaigning, she gets one of the biggest banks in America to rescind the $5 fee as do all major national banks in response.
Adam Lashinsky: But how do you know that it was in response to this petition as opposed to the negativity in social media?
Ben Rattray: What’s powerful about petitions is they prolong the citizen response or consumer response. And so what we oftentimes have is the company will sort of outline a new policy. You’ll have an immediate reaction on Facebook or on Twitter and then after a while that will just evaporate and it’s difficult to mobilize people constantly. But if you have a petition, because you aggregate those people and have access to follow through, you end up actually having an ongoing movement that puts much more pressure on companies or on politicians to change.
Adam Lashinsky: How about a campaign that is interesting that got a lot of attention perhaps, but didn’t work. Because I assume not every petition succeeds.
Ben Rattray: So one campaign that was quite popular in this last year was around the company Target. And a number of employees were frustrated —
Adam Lashinsky: Somebody you’re saying targeted Target.
Ben Rattray: [Laughs] Yes, exactly. The irony was lost on them, but they had this really effective campaign, and 200,000 people joined. It was on Thanksgiving where Target for the first time was extending hours so that workers weren’t able to be with their families during Thanksgiving. And so 200,000 signatures, a huge public response, huge media exposure, and it didn’t end up changing. But what was notable, and we’ll see this on a regular basis, is it will change the behavior of companies in the future. They will be deterred from making decisions in the same fashion because they recognize now the costs of doing business in the way they did before, without recognizing or asking [for] either customer or employee response, because now those customers and those employees are a rapid-response lobbying group that can change the media landscape.
Adam Lashinsky: So I should acknowledge that I’m more knowledgeable on your product than I am about most products that I write about or interview people about because I started an online campaign, a very, very local one. And what was fascinating was that in a matter of hours, I could create essentially a grassroots political organization around a very specific topic, which is what you’re talking about.
Ben Rattray: Yeah. What’s most powerful, the petitions that are most effective are on single, specific issues asking a decision-maker who has the power to make change. You know, historically what you would see is you might have a petition asking all banks in America to end all their hidden fees, which might get people riled up, but wouldn’t be very effective. But if you get a single petition around let’s say Bank of America to end a specific $5 fee, it [has] a much greater chance of victory. And so these things ironically by having lower aspirations in some cases, more local, more specific, it’s much more likely to win. And the response to that [is it] actually generates more petitions and more victories because it excites and energizes people. So the ultimate impact is much greater, but the means by which you get there is many smaller campaigns.
Adam Lashinsky: So as an organization, you’re out there doing good. You are almost literally speaking truth to power. This has all the hallmarks of a nonprofit, of an advocacy do-gooder group, and yet you’re not a nonprofit, correct?
Ben Rattray: Yeah, we’re a social good business. We think that —
Adam Lashinsky: Ah, hold on. Social good business, what does that mean?
Ben Rattray: We’re a business that is dedicated not to maximizing profits, but maximizing the impact that we have on the world. And so we’re what’s called a certified B corporation. It’s using business for social good, where we don’t look at just shareholders, but rather the stakeholders surrounding us: the community impact that we have, the environmental impact, impacting the lives of our own employees. And by taking a broader perspective on the utility of business, what business can do for the world, we have much more impact than we could frankly if we were a nonprofit.
Adam Lashinsky: But how do you make money?
Ben Rattray: We generate revenue through advertising from major nonprofits and political campaigns.
Adam Lashinsky: And about how big are you, how big are your people, what’s your budget?
Ben Rattray: About 175 staff across 18 countries…
Adam Lashinsky: 175 people.
Ben Rattray: Yes.
Adam Lashinsky: Sorry for interrupting you. 175 people across 18 countries.
Ben Rattray: I wish it didn’t take as many people to run what we did, but it is actually a case that we’ll grow even faster this next year than ever before. And when you see in sort of consumer Internet properties that are going viral, like Change.org, is you have this exponential increase in the resources available and therefore the staff we have to build these free tools.
Adam Lashinsky: Okay. So 185 people, that costs a fair amount of money. What is the source of your income other than the advertising you’re doing with nonprofits?
Ben Rattray: It’s a self-sustaining organization based purely on revenue from nonprofit organizations [and] political campaigns. And the commitment of the company is as we generate more revenue, we hire better people, more people, to advance sort of better technology for more change. And that’s the focus of us, is because we’re not maximizing profits, the resources we gain are all dedicate to that service of impact.
Adam Lashinsky: Who are your investors?
Ben Rattray: The investors right now that have thus far given money are basically private, somewhat philanthropic individuals. And what we’re looking at right now, is we’ve been reached by a lot of different organizations that have been wanting to fund the company, and we’ve made a commitment not to not take more money but to only do so from investors that are completely aligned with the mission of the organization.
Adam Lashinsky: So can you give me a sense of when that will be and who — I mean, I know you don’t want to say who those investors might be, but what kind of investors think like that.
Ben Rattray: There [are] very few of them, I will let you know, we’ve spoken — I mean, it’s the case when you have the successes we’ve had over the past year, you do get a lot of sort of unsolicited interest in investing in the company. We’ve been very clear that we never expect to go public, we never expect to sell the company. It will be a long-term, private, independent, successful venture. And there are very few investors that are amenable to that, but there are some. And so we’ve been talking to a number of them and are especially excited about how do we accelerate the impact, not just in the United States, but around the world to do so.
Adam Lashinsky: But are you suggesting that the payout for an investor in Change.org is cosmic as opposed to financial?
Ben Rattray: I think there are — there is certainly cosmic benefit to it, but ultimately I think we need to as an organization to be self-sustaining and to actually demonstrate to the world that it’s possible to build businesses for social good. It’s also possible to be profitable. And so it’s important for us to be able to give some amount of return. It is not traditional liquidity. But there are other ways in sort of non-secondary markets to give liquidity through loans and consumer buybacks or through other ways of sort of taking in additional investors that might buy out initial investors.
Adam Lashinsky: You’re saying you could pay a dividend.
Ben Rattray: Yeah.
Adam Lashinsky: Or you could sell another stake. But that’s similar to going public or selling the company.
Ben Rattray: I think the difference is it’s a much different profile of the possible investors in the company. It’s a much smaller number of organizations, and the way the organization is structured at Change.org is the board has the right, based on mission, to veto any investment at any given time. And it’s actually an employee-owned organization, where sort of the founding staff and the employees own the majority of the stock that determines the board, which retains this mission-driven aspect of the company.
Adam Lashinsky: So what’s your relationship with the corporate world?
Ben Rattray: I think we have, we hope, a positive relationship that actually informs businesses about the behavior and the sort of interests of their consumers. Historically it’s been difficult for companies when they release a new policy or program to get immediate rapid response from customers. And now it’s easier than ever before, and it also happens to be more effective. And so in some cases it can feel adversarial. But the hope that we have is that we provide a means by which companies can directly communicate with their consumers, and so people that sign petitions can actually get responded to directly from companies that want to communicate with them.
Adam Lashinsky: But you’re offering a one-way communication platform: customers can communicate with companies. You’re not offering companies the opportunity to communicate back through you, are you?
Ben Rattray: Historically we have not actually provided that two-way channel. And one of the most exciting things in the product that will come over the next year is that ability to enable decision-makers that are being petitioned to directly respond, and companies in particular. And so it’s actually in the interest of users, of the people that are trying to call on companies to make change, to be able to receive a response and actually provide a more constructive, effective means of two-way communication.
Adam Lashinsky: Will you charge companies for that?
Ben Rattray: No. We think we have an interest in our users. The mission of the organization is to empower people to create the change they want to see. And as a necessary condition of that, when they call on companies to make change, they need to be able to get a response. And so we think it’s in the interest of our users actually to engage companies and [allow] major decision-makers to be able to close the loop and make real change.
Adam Lashinsky: So I sign a petition opposing the actions of some company. You are going to ask me when I sign that petition, “Is it okay if that company responds to you?”
Ben Rattray: Yeah. So we’re looking right now through sort of the responsibilities and the rights that individual decision-makers have vis-a-vis creators of petitions. I think we need to find that appropriate balance. But what you find are the people that sign petitions usually want to get a response from the decision-maker in part when they want to advance change. But just receiving a response, even if it doesn’t immediately comply with the demands of the petition signers, it’s actually — it’s really empowering. To get a response from a major company just because you and a bunch of your friends and network signed a petition, it’s a validation about the impact that you can have. And we want to be able to facilitate that.
Adam Lashinsky: Is there such a thing as a misuse of Change.org? So for example, companies have been encouraged to go on Facebook and do whatever they like and Facebook seems to be fine with that. But what if a company tried to market a product in the guise of a petition.
Ben Rattray: I think what you find is because the platform allows for real transparency and doesn’t actually give extreme authority, let’s say for a company that is making a response to a different petitioner, they can respond with sort of corporate-speak or with spin. But because it’s not a space they own, like they own their Facebook page, there’s a lot more accountability, because when they create petitions or respond to them, there’s a response back in a way that the companies can’t completely control. It ends up making them, I think, a lot more responsible in their behavior.
Adam Lashinsky: So have companies or others tried to misuse the platform?
Ben Rattray: I wouldn’t say they’ve tried to misuse the platform. In fact I’ve seen companies before try to advance political change or legislative change in a really healthy way. In fact, right now this is very popular in the startup community where companies like Uber, who are disrupting the taxicab industry — when they go into a new market if they receive political negative response, users of Uber will start petitions mobilizing Uber users and others in support to be able to advance political change at a local level. And we think that’s really healthy.
Adam Lashinsky: So Uber users or prospective users have used Change.org to advocate for Uber to be allowed or in their community. But Uber has not used Change.org to advocate.
Ben Rattray: Uber as a company has, as well. I think that insofar as this is transparent, an organization, a company is trying to call for a change in a law, and it’s under the company’s name, and it’s quite clear, I think it can be a really positive response. You see this with a lot of energy companies that have used the platform to call for change in wind energy and sort of tax credits, and it’s actually a really powerful, important way to advance change, as well as leveraging. I think companies have this incredible ability to advance positive change. And it’s not just companies that are charity-like, but it’s companies that are doing things in the world that impact housing or transportation or health. And we want to bring those into the conversation as well.
Adam Lashinsky: If I run a political advocacy organization, can I use Change.org to raise money?
Ben Rattray: Not right now. It’s not the case that you can raise money through the platform. We talk a lot about how we want to make it a reality that your voice is more powerful than your pocketbook. That doesn’t mean money doesn’t matter. Money can be a means of advancing change, as well. But what’s most powerful and unique about the platform is that the aggregation of millions of voices is much more powerful than millions of dollars
Adam Lashinsky: One last thing. I think the most common type of petition that I’ve seen over many years is for political officials running for office. Most jurisdictions have a petition process in order to get on the ballot.
Ben Rattray: Yeah.
Adam Lashinsky: Are any — have any jurisdictions approached Change.org about using Change.org instead of whatever system they’re using now?
Ben Rattray: Yeah. And there’s a really powerful opportunity here to make much more democratic and fluid the process of starting petitions for legislative change. It has not yet actually been legal in any different jurisdiction. There is an attempt right now in California to make it the case and we hope to help advance that. But it has not yet happened. I think it is inevitable in the near future, though, it will.
Adam Lashinsky: Great. Thank you so much.
Ben Rattray: Thank you very much.