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Hootsuite’s B Corp. status in question once again following complaint

Investigation expected to conclude by April
Hootsuite's headquarters in Vancouver | Submitted

Hootsuite Inc.’s B Corp. status is once more up in the air following another complaint to the organization that certifies businesses meant to uphold high social standards.

report Tuesday (January 5) from The Logic revealed that the Vancouver-based social media management company looked primed to retain its B Corp. certification following outcry last fall over a contract signed with U.S. Immigration and Customs Enforcement (ICE).

B Lab Company, the organization that administers the B Corp. certification, did not initially respond to multiple inquiries from BIV this week. But on Thursday it confirmed an investigation into Hootsuite’s B Corp. status has been opened.

“As of January 5, this is now an open investigation and B Lab does not comment on open investigations,” the organization said in an email to BIV.

In an additional statement posted to Twitter, B Lab said an appeal was made following the original decision to allow Hootsuite to retain its B Corp. status in the wake of signing a contract with the controversial American law enforcement agency (Hootsuite said in September 2020 it would back out of the deal).

“We know this decision is important to members & supporters of the B Corp movement, & as its stewards, we’re committed to the principles at the heart of this work. Like B Corps, B Lab is on a journey of continuous improvement & we appreciate your feedback every step of the way,” B Lab said in a tweet.

The new review of Hootsuite’s status is expected to be concluded by April.

B Lab administers B Corp. certifications for companies that meet what it describes as the highest standards of verified social and environmental performance.

Hootsuite’s certification was called into question last fall when it came to light that ICE had awarded the Vancouver tech firm a US$500,000 contract through a third-party vendor.

The American law enforcement agency has been the focus of criticism, controversy and outcry the past two years amid Trump administration policies separating migrant parents from their children at the U.S.-Mexico border.

Hootsuite employees began speaking out publicly about the deal and the company initially issued a statement to BIV on September 23 implying it had no involvement with ICE.

A day later, CEO Tom Keiser acknowledged the deal and said the company had decided to pull out of the contract.

However, an ICE spokeswoman told the newspaper on September 25 that it had received no notification that the contract had been dropped.

Hootsuite has yet to address multiple inquiries from the newspaper to clarify the status of the deal or to clarify the initial statement sent to BIV implying it had no involvement with ICE.

At least two workers who had admonished the ICE contract on social media were let go from Hootsuite shortly thereafter.

Hootsuite did not immediately respond to further inquiries from BIV regarding its B Corp. status.

Earlier this week, the company announced it was acquiring U.S.-Belgian startup Sparkcentral Inc.

The new acquisition specializes in engaging with customers via messaging services such as Instagram, Twitter, WhatsApp and Facebook [Inc. (Nasdaq:FB)] Messenger, among others.  Terms of the deal were not disclosed.

Keiser said in a press release Wednesday the acquisition came about following requests from customers for more options in “the area of social customer care.”

Hootsuite has long been the centre of speculation regarding its own exit.

Co-founder and now executive chairman Ryan Holmes announced his intentions to step down as CEO in November 2019.

Keiser, who lists his location as San Francisco in his LinkedIn profile, was recruited in June 2020, shortly before the ICE controversy unfolded.

In 2018, Reuters reported the company had engaged Goldman Sachs Group Inc. to inquire about a potential sale.

But the process was abandoned just before Christmas 2018 when Hootsuite determined offers were less than the US$750 million it was aiming for, according to a January 2019 report from the Globe and Mail.

Holmes said in a November 2019 statement to BIV that Hootsuite undertook a benchmarking exercise and determined that the company “sit[s] very well amongst a number of criteria” for other companies that have gone public in the past year. 

The team found that within the companies examined, the average age was 14 years old, the average valuation is $3.6 billion and the average annual recurring revenue is about $200 million.

Hootsuite was founded in 2008 has about 1,000 employees worldwide.

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