Stories of employee ownership from the Employee Ownership Equity Summit

[Applause] [Music] [Applause] hi good morning everybody uh I'm on the client services team at project Equity so I'm really working day in and day out with businesses employees uh selling owners of those businesses who have either you know decided to transition they're may be still in the process of deciding or they've already transitioned so one group that we work with is called the Founders Circle uh that is a key resource in Project equity's effort to scale employee ownership and that group is made up of Select Business Leaders who have already sold uh their businesses or a portion of their businesses to their employees um and the members are passionate Advocates of employee ownership two outstanding members of that group are here with us today Cameron maidel and Dr Kristen Cly barrero uh Cameron founded pixel spoke which is a social impact marketing agency and bcorp based in Portland Oregon uh in 2020 uh the business was sold to employees forming a worker-owned cooperative and Cameron is also really active in the entrepreneurial sector of Portland he helped to found be local PDX which is the local Bor board in Portland founded an accelerator for entrepreneurs and has been honored with Awards such as the 2018 be economy leader uh for his work building borp communities and he was part of the Portland business journals 40 under 40 award Kristen is the co-founder of ct3 which is an equity focused education Consulting practice based in San Francisco uh that company transitioned in 2023 to an ESOP an employee stock ownership plan and Kristen has spent more than 20 years in education as an educator principal Advocate author and executive coach well to kick us off maybe you can each just tell us a little bit about the origin story of pixel spoke and ct3 um you know we've all or many of us will have heard about the silver tsunami which is you know baby boomers exiting their companies neither of you really fit that mold so very curious you know how what this Journey's looked like for you um on my 45th birthday I named that we would have black leadership and we would become an um an employee owned organization on my 50th birthday um when the events in our country happen with George Floyd because I'd already named um that I would be stepping down it I I was like wait a minute this is the time for black leadership now and it didn't feel performative to me in any way because it was going to happen in two years anyway so when I named that we'd be an employee owned organization when I named we would have black leadership in our organization I had ideas on how to do that I didn't know quite how I was going to do that but I had like succession planning and five years to do it so through education development Chief program officer naming her to be the next CEO me being able to really take a step back that's why we moved so for us it was about um income in quality like most of our folks have master's degrees and phds however doesn't mean those Grown Folk know how to save money so ESOP was a big deal for me too because even though we had done almost 10 years of education and then three years of education for ESOP it was also about how do we um ensure that we that folks that are working very hard doing what I consider the most important work in education are rewarded at the end of their careers with lifestyles in which they get to relax and enjoy so esops are retirement funds so that's one of the reasons why we moved in that direction so I found out my company pixel spoke uh back in 2003 there were many sort of twists and turns but I think the um as we sort of evolved and grew throughout the years I think for me I had I just kind of had a sense this was not the the last thing I wanted to do with my career um so basically I guess the core of what we do started out being kind of websites and and uh web technology there's like this whole cohort of very unoriginal entrepreneurs who were like I don't have any money I have a laptop I think I can figure out how to do some of this and that like we went from that and we evolved the business quite a bit over the years we found I think we found a lot of our heart and soul when we we joined the certified bort movement in 2014 and so for those those of you who may not know it's it's arguably the most um rigorous kind of holistic assessment of a business's impact so um you know employees governance uh environment uh community and uh your clients or customers so that was kind of the first place where it felt like we had found a home um we also started specializing in uh Credit Unions so that was actually in a sense my first real introduction to cooperatives um we don't talk about it enough right but they are Cooperative you know not for-profit Banks um so I learned a lot um and I think I went to a lot of events that just got me thinking about a lot of what I think mayor tubs was just speaking about of um how is money actually structured in this country and yeah why are we have all these myths about how um income and wealth are the way they are um and then I think lastly I had just met uh what may I get that's may as the next question so then yeah in 20120 we converted to employee ownership uh and then I stepped down as CEO in December of last year you both um I think it was pointed out in the last uh discussion just sometimes people can think crazy things when they hear the term employee ownership and there's a lot of stereotypes attached to some of the models we talk about particularly the co-op model so I'm curious when was the first time you know you both heard about employee ownership and what did you think what stood out to you you know as to why you would want to pursue this particular model to drive Equity within your companies and Christ spoke a little bit to the ESOP side of things but I'm curious Cameron for you why a co-op yeah so I first I heard about this idea um actually at the annual borp Retreat um I think it would have been 2017 and honestly it was something that I just I heard about that and I was like that's it I want to do that that feels right that sounds right um I remember doing a personality test fairly early in my career it was a it was a version of Myers Briggs and they described me as having a minmax personality which basically means I want to do the minimum amount of work to get the maximum amount of results so I can be hardworking right I think probably on the whole I've been a very hardworking person in my career but I'm just I have this kind of lazy side that's just like oh this is so hard why are we doing it this way and I think another sort of way to tell the story of my career was just of continual engagement and empowerment of our employees um so we started doing uh open book management transparent finances except for salaries in like 2009 um and we just sort of continually became more transparent and sort of handed more control over to our employees and what I found was that it was always like more work upfront but then I felt like it it was so much easier for me after that and so this felt like kind of the natural um you know Zenith of that kind of mindset of there's all this stuff right in the entrepreneurial or sort of business literature about creating an ownership mindset and it's like well why not actually just literally create ownership right like that seemed like the simplest way um to really create that kind of outcome so it just it felt right to me um and it's been really kind of wonderful to watch what our team has has done with it Kristen you talked a little bit about building Equity but I'm curious this is a question to both of you but um what was your vision for how employees before you transition before you instituted the ESOP before you transition to a co-op um what was your vision for how employees would live into employee ownership over time so at ct3 like uh the reason why I founded the organization is because I was solving problems in education that as a principal and a superintendent I need to solve so real-time teacher coaching unpacking disempowered mindsets of of teachers those kinds of things but what I recognize is just because the research was the research that I started the employees made my work frankly so much better and quite brilliant right like much better than I had ever imagined so they own like one of the great things about getting a PhD is that they teach you hold on to your intellectual property don't let the university own it don't let you know the organization you work for own it so whereas if you go to business school they don't teach you that so um so for me part of the equity and the anti-racist part of the work that we did was they're making this work better they should own a good part of the the intellectual property of this as well um and I grew up in it with a father who was a Serial entrepreneur and he did a lot of different things to be what I would now consider a conscious capitalist so what in ways like I can't change capitalism in this country but I can be a lot more conscious about how I operate within that um and so what are the ways to operate within that to build some income equality but also train and teach and Empower those who haven't had access to the same education I did Growing Up In my Father's house that how do you utilize money to work for you how do you make it so it's a resource that is uh plentiful instead of always um a scarcity how do you think about how do you treat how do you engage with so we did a lot of that work and a lot of it came through you know retirement and planning and saving him five you know uh uh 529 plans for your kids making sure that the employees were buying homes you know to build so we did in a lot of different ways but that was one of the ways that I was trying to be a conscious capitalist and share like I can't give you the keys to the kingdom but I can teach you how the kingdom works for rich white people so let me give you the Playbook was kind of one of my ideas of being a conscious capitalist with really smart folks of folks of col that just didn't have access um necessarily uh even though they had the educational access they might not have had the the income access so that was just one of the things that we did that was our side hustle when we were sitting and meeting and working with critical race theorists and those kinds of things around our works it was just you know one of the things that we were doing at Retreats and stuff like that um to ensure that frankly my second family is well taken care of so that's how it came about about for you Cameron what was your vision for how employees would benefit from this yeah so I think um I I guess I'm going to go back to some of the stuff that again that mayor tub said of there was a lot of stuff about businesses usual that just didn't make any sense to me you know this idea that like a chronically stressed Workforce with um extremely difficult targets that are automatically ratcheted up every year um in kind of like a hierarchal hierarchical controlling structure in kind of the worst sense of that model like it just never made sense to me that people could do good work that way um and and I always felt like the more that we could do to care for like the mental emotional relational physical spiritual well-being of our team the better the work they would produce um and so this felt like you know this whole notion of we win together one of our company's core values as everybody wins which is kind of a wonderful um it's kind of a wonderful core value because it's easy to say right like everybody wins and then you find out no like the project manager worked till 8:00 p.m. and the design team won and the client won right or you know these these people won but the client lost or whatever configuration so this just felt to me like the Natural Evolution and so I just wanted to see um in somewhat exalted terms like like taking care of my second family you know greater greater meaning and fulfillment in work greater Financial stability and security greater understanding I think this is um you know co-ops done really well are are literally a tool for teaching us to be better citizens right like we really don't engage in the Democratic process directly very often anymore on a societal level so yeah I had pretty high high aims um uh Cameron you have been quoted uh I don't want to put you on the spot but you've been quoted uh in the past as saying the most amazing part of this whole journey for me has been watching our team co-owners and leaders take charge of pixel spoke and Lead growth and changes themselves so I'm really curious you know have these Visions come to pass how's it been going what changes have you seen within the company maybe it's around leadership maybe it's around company performance metrics maybe it's something else but give us some insight into how this has been going so far for you you want me to go first okay um so I mean there's two answers I think we we converted in January of 2020 right and so if we all looked back and said like you know hey congratulations you a company it's January 2020 have a fun year um you would feel a little guilty perhaps right so we were navigating I would say you know we definitely had a lot of adversity and it's hard to say what was navigating you know navigating with all the The Fallout of of George Floyd's murder and the kind of insane National political situation and a pandemic and and all of that you know permanent switch to remote work um so I think some of the things that surprised me was first of all the team started making decisions that in a couple cases I really disagreed with so one which I think was pretty profound was we removed the Merit element of pay increases and I was just like this is crazy this is like this is like the core of what you know a a privately held business is and you need to be able to you know in essence say like this person gets a little more than that person cuz I just feel like they gave more um or I felt you know just this kind of subjective piece and what was really hard for me to swallow but I ultimately came around to it was seeing just how subjective and biased that is how it creates an healthy culture where we say awesome you had a really you know High performing year maybe just cuz like your personal life was really great that year and so now we're going to give you a big pay bump and we're going to crank up the expectations really high and you're not going to be able to meet that this next year when you start having family troubles or health troubles or whatever um so that was one that was really fascinating um I think another thing that was and by the way Nancy are you out there somewhere so Nancy is our board president um she's our ux director at pixel spoke she's awesome if any of you want to talk about more of this um she'd be a great person to talk to um I think the other thing that was really cool was there's the really short version of this is that you know there's all this literature around change management and the idea is like the the the leaders the smart people get in a room they come up with a plan and then they come out and Inspire everyone in a room like this where they're blinded and they can't even see your faces right and and then it's just like we're going to do this and and you do it in like 30 minutes and then you're like all right and then you're shocked when like 3 months later you know people are like I always thought that was a bad idea right or the person who's doing the work is like you know I'm taking a month-long vacation which you approved you know a year ago or whatever so I think it was fascinating to watch how we in many ways make decisions slower because we do the change management first and then we just go and all the BS and all the kind of like the back talk and the gossip and the it all just largely disappeared which was really wonderful as as a leader CEO how about for you Kristen C3 ct3 has a pretty amazing culture um and so the cultural aspects of moving into employee ownership we've been preparing for it for almost five years I think I reached out to Stacia project Equity a good three years beforehand and I was really clear like I turned 50 on October 26 of 2023 and we will be an ESOP because if I am nothing I am my word right so um and so the cultural aspects of leadership remained really strong um and they did a much better job than I think that I ever did around educating one another around what employee ownership meant because I kept coming from my Paradigm um answering questions and those kinds of things and um then Stacy and the team at um project Equity were really helpful too with other things and then we would program because we do a lot of professional learning and programming so we do it in ways that would work for our team um where they struggled though were making some financial decisions like when I would look at their budget as the chair of their board saying hey you might want to save a little more for taxes oh no we'll be fine maybe you will be and you weren't so like those kinds of things but it's also like you got to make the mistake and it's really hard to sit back there and not say I told you so like right Cameron it's really but at the same time what I'm clear about is that they won't make that mistake again they had this real pain point right before we became an ESOP that trained them that oh Kristen isn't here to take the wheel Kristen's really going to make us do this um and when I announced my 45th it like it was really hard for me cuz three of my most radical black women who I just adore bored and looked up to and thought you know would constantly engage with me around my racist beliefs and how I was presenting and those kind of things they came up to me and they're like you can't step down and I was like what they're like you get us all the seats at the table like you can't leave like the important part of anti-racism is to have you know white faces particularly white female faces out there it's like I get it but let's talk about all the other things so from a cultural aspect some folks did choose to leave because they it was a different movement it was becoming a different movement with employee ownership so that was interesting to see happening um but overall I think now they just take so much more responsibility for what's happening they engage more um in what the day-to-day looks like and honestly like I still support ct3 two days a week but nothing internally facing all of my work is externally facing you know to keep supporting them with their contracts and strategic planning with big districts and those kinds of things um they run it um and I meet with the CEO usually once a week and we have conversations and if she needs some coaching great and I would say more than 50% of the time she forgets what I said um you know and it's like okay but it's great because they're making it their organization and so um which is what exactly what it should be yeah that's so interesting we talk a lot on the client services team about our work being like therapy sometimes therapy for the employees kind of building their capacity to step into these roles and therap for the selling owners or Founders who are kind of stepping away um but just it's it's so just wonderful to hear the employee perspective I'm curious if you stepped into their shoes what do you think they might say has changed in terms of their experience oh that's interesting I actually have my first call with them where they get to ask me questions since the three years that I stepped down so I don't actually know the answer to that yet because a lot of nataki our current CEO's goals have been very fiscally related because that was her biggest opportunity for growth and Improvement and where um some mistakes happened so that's where a lot of her work's been and now it's getting back to they're doing really well again and so it's getting back to like the leadership the culture as well as the financial aspects of the organization um like yeah I don't I don't know what they would say I think their day-to-day work is really familiar but they have business updates once a month that they got to dig in and an Ask good questions um and I think they dig in in very different ways like they want to know as a sales you know as a partnership team I.E the sales team hitting the goals what can we do to support them with that um how are we as folks out there in the field making sure that the customer service experience is well incredibly rigorous also thinking about what is next for them instead of somebody else taking care of that so I but I think generally speaking their day-to-day feels really really similar but I won't really know the answer to that question till the end of May um so yeah it's a great question I mean my sense is that the because we had done open book management for a really long time we had practiced a really I think you know engaged form of strategic planning where we just we're always kind of driven I think I was driven to do as much kind of teaching right like assume that that all these people are as smart or smarter than me and uh they have a lot to contribute so I actually don't think that changed a huge amount I do think on some levels the um the sense of warmth and connection reached to like an almost crazy degree of just like I mean this is one thing that that kind of blows me away Nancy tell me if this has changed did anyone quit in the last week okay we haven't had anyone leave since May 2021 and we always had great like good like retention for a marketing agency but marketing agencies like you know like geneticists use fruit flies to stub you know to study genetic Concepts because they die incredibly fast like marketing agencies are like the fruit flies of like the the business world so to yeah to me that's almost weird like knock on wood um and and a lot of the I guess a brief story I guess here's a brief story we've done our retreat in Mexico each of the last two years we did it in Cabo and there was a lot of drinking and not once that I have the slightest like tinge of anxiety and so all I mean by that is like they're just incredibly empowered adult like people who own their jobs they own their work there there's just no like kind of BS Shenanigans there's hard things that happen but we work through them like adults and I feel like like I from the beginning I felt like most business practices were just kind of like ass backwards right and and that like this whole idea of like open book management has this idea of like we tell our employees to put blindfold on and then roll the bowling ball down the gutter and then we say not bad uh try to go a little bit to the left this time or whatever like it's insane take the blindfold off right and let them have the knowledge they need to do their jobs well so I think a lot of this stuff is really like it's common sense it's just uncommon practice like like mayor tubs was saying this is like kind of kitchen SN level logic stuff and when you do it people are just they're happier they're more engaged they feel more financially secure um so I think it's really and like that's probably it almost feels like an incredibly high functioning family I think the business's family you know analogy can be really risky right because it's not the same thing but it is sort of like this family of of incredibly smart engaged committed emotionally intelligent people working together versus all the default hierarchies and insecurities that go along with uh a normal private company what about on the business side of things we're talking a lot about employee engagement you mentioned retention um are there any other business changes um that you've seen come about so not on you know the selling owner side not on the employee side but for the business itself um give us some insight into maybe what's structurally changed or been benefited from this transition you know political climate definitely our funding a lot comes from it comes from Individual philanthropists and stuff like that that want to do great work in schools it comes from but most of it comes from the federal government um and how folks use their title dollars and so um you know for us it's been really difficult because there's all these anti- Dei and call it whichever you want we can we can we can beat you at every game and we we we take on you like we do a lot of work in Oklahoma who would have thought right like you can do the good work in places where people are willing to be courageous but there's a lot of that that we have to do now that's interesting um that we've always had to do we just have to do it more um and uh I think it's that you know racism has always been a part of the history of this country however with the election of that last president I had nothing to do with him being elected um not the one now that last one I want to be clear okay I just want to make sure um we we pulled up the underbelly and the need for our work at ct3 was like whoa like we had a tsunami of folks wanting to engage with the work um and we had to learn because we went just straight to anti-racism because before we could um kind of choose who we were going to work with like are you ready for our work and when I was strategic planning if you weren't then we would get you in line with other organizations that did like critical Consciousness work or what have you and then we would be a couple years down the line for you then we had to start meeting like folks where they were and re look at the work that we were doing as Marathon work instead of Sprint work so policy politics has definitely influenced the work in a different way and I got to be honest um my black brothers and sisters and Brown brothers and sisters have made me way better at this work because I have zero patience and you know when you have a whole lifetime of trying to figure out being patient they they talk me back and make sure that when I go to tables that I'm ready for the conversations um so that I can keep them out of the the emotional um toll that you know racism take when I can you know support them in the emotional toll that some of these policies and stuff like that so I can go be the one arguing with that so I think the last certainly since I've stepped down but even the last you know five six years um has been significantly different just because of where what kind of work that we do and the election of you know that last cat yeah yeah I mean I don't know if this is the right time but um you know we've grown almost 60% since we did our conversion to employees ownership profits have been between 12 and 18% what's interesting is they've come down as we have just a little bit as we have intentionally um I don't want to say overpaid what a terrible World we've shot to be higher in our pay bands like of course we should right we're employee owned um and I think we've actually gotten even a little more bold strategically so one of the things we talk about a lot is our our 10-year vision is uh to be a renowned employee ownership casee study and so that is only going to come through doing great work um and being a model for kind of uh social impact conscious capitalist practices but also being an economic success story so I think we just have gotten maybe even a little more confident in that sense I like that goal I think I'm steal I'm gonna steal that and there I just sent them back their strategic plan I'm G push that I'm like hey what about this I like that goal that's a good goal hey study that's great thank you so much for being here I have one last question for you before we close um if you could say anything or offer one piece of advice to businesses considering employee ownership or to a practitioner considering supporting them what would it be uh get get the organization ready for the financial investment you're going to have to make so I invested deeply in a pretty expensive um getting back to what you were just saying Cameron um we did a a employee uh Equity study for um uh salaries thank you so we knew our benefits were pretty amazing like we had gold star benefits we had great 401K that kind of stuff but you know we're in a space where it was hard for me to kind of gauge you know my level of research if we were paying the top 75% tile so we engaged with an organ a women-owned organization called agility who recently actually reached out to me about turning into an esab um and so agility went and took us through so they have this study now so that they can make sure because part of our anti-racist practic is everybody's salaries are very clear as to what they are and when you come to work for us we don't negotiate with you this is this is this is what we're paying for this and we know we're in the 75th percentile or above and we'll share the studies with you that kind of that kind of stuff so we try to live our work so getting that set up was really important so they didn't have to look back and think oh what was what were we doing there make ESOP is is an expensive in Denver like the amount of attorney's fees and um consultants and what have you they're all amazing people but it's pretty expensive to set up an ESOP so be clear you have about a quar of a million dollars to do these kinds of things so make sure that you have the finances in place esops are typically for organizations that are I'm I think I'm right I 30 employees or more you know you're going to yeah so EA is important in this conversation and which we had a strong one and we had a lot like all kinds of folks are trying to buy ct3 you know to bastardize the work so um that wasn't my exit my exit plan was like keep the work so it stays true to its form and goes back into the hands of the people who again are developing the IP and the great work so making sure that financially you set the team up for Success would be my big thing they've got some decent reserves in there that you've done some education um around what does employee ownership look like what does in our case ESOP or Co-op look like so give yourself a Runway of you know a more than a year and I would say I I was really happy with my Runway of three years and it still felt like it wasn't enough time um but you can do it faster depending on the you know the types of work you're doing and what have you so I would just make sure that you don't set them up for failure because you start draining bank accounts would be my biggest thing and you know plan for those and then set them up for success with the right studies to have in place that once you do release them that they have the data and the resources to lean back on um yeah that would be my biggest part of you know piece of advice all right I'm going to do that thing where I say more than but I'm going to go fast Sarah I know you're stressing out all right so first of all I wore I'm proud of these these are my enjoy the journey socks this is another one of pixel spokes core values uh we got them for everyone all our clients it's really fun like I think sometimes people forget about this it's really amazing this is like as an entrepreneur this is your baby and like don't divorce it I'm I'm like I had a friend I talked to like a couple months ago 15 years in his company and then he walks in one day and says hey this is the new owner and effective 3 p.m. today my email shut down and you'll never see me again and I'm like WTF right like you have poured your heart and soul into this so employee ownership is Far and Away the best way to meet all the stakeholders that matter to you you can do great financially you can also take care of your employees you can also do well by the community um so I I think just and and I guess one of things that was really powerful us is you can separate the leadership transition from the ownership transition which makes it a lot more likely to be successful so I got spent 4 years working in my company where like I mean I joked about this but like the board could have fired me at any point you know come January 1 2020 um so I just think that that is something like thank you all for being here and and why the work you're doing is so important right like our communities need this our companies need this and it's just it it is that as I mentioned it's the everybody wins option um for all stakeholders so there's a lot of ways to meet one or two stakeholders but this is the only one thank you both so much for being here please find them later and ask them questions and I'm going to pass it back to Sarah [Applause]