The employee ownership ecosystem: panel discussion

[Applause] well one we actually have each of you introduce yourself and just say Who You Are where where you work but but not your entire life story if you don't mind all right because it is indeed long I know um good morning everyone I am Tara Lynn gray I am the director of California's Office of the small business Advocate which is inside of the governor's office of business and economic development thank you perfect thank you for modeling Sam uh my name is Sam Brownell I am from Washington DC I actually discovered uh Ben is my neighbor about two miles away so um I work Stratus Wealth Advisors and what we do is succession planning so we help business owners figure out how to keep their company going and worker ownership is one of the Great transition options that are available so that's what we'll talk about a little bit more mayor uh hi everyone Paula d'ambrosa from Prudential I lead our work and wealth portfolio which is focused on everything you just said so much more eloquently than I ever could right really Building intergenerational Wealth and like I was saying about the ecosystem their money helps us all come together for this so thank you so this is the question and I'll start with you director um what do you see as your sector so as Government as government's role in building this ecosystem and what's limiting it from happening right now so your role as as state government in in making this happen so I am proud to um say that my office funds one of the largest small business ecosystems in the country through our technical assistance program we fund more than 102 centers across the state that provide services to small businesses low cost and free one-on-one counseling classes Etc yeah I see you back there yes we are doing it right here in California so I say that because ecosystem is one of my favorite words and I am happy to be here to listen to the expertise about building an ecosystem to support employee ownership it's significant you all talked about um the statistics how we get to be a majority minority country but one thing that I did not hear yet this morning is one of the impediments by 2053 black wealth is set according to road to zero read it if you haven't it's set to be Zero by 2053 and Latino wealth 10 years later is set to be zero so this is an imperative this is not uh can we should we this is we must deal with Equity we must create the ecosystems that can support that so what are the impediments um I'm proud to say that SB 1407 has passed in California yes to all the Champions who helped make that possible and so my office gets to lead an effort by setting up an employee ownership Hub so we get to augment the awesome ecosystem we already have within employee ownership Hub to get the word out access to New Markets access to Capital that's what we do cool and I know I'm already breaking my own rule but since I'm the moderator I can do what I want uh how long did it take do you know when did people start to try to pass that law and how many years later did it pass do you know I really don't know the history it I think I think it started it predates me um the governor appointed me in um March of 2021 so I actually think that the history on this predates my term um as a director but I do believe it's been a good little while yeah yeah and I disappointed making it it's like when you get those transformational pieces of legislation it's not like they popped up automatically overnight they usually failed for three or four legislative terms and and uh yeah and it's not appropriated yet right so while we have the legislation there is no money and it's not funded it is not appropriated yet hint hint no question no question excellent um Sam same question what do you know uh what do you see as the key things from your perspective from capital and the like that is needed for the ecosystem and why isn't it happening yeah good good question so so a couple of things to think about and and the mayor talked about it earlier and and from our perspective it's this transferability right transferability of assets that's where wealth comes from right business is well-run businesses are worth something and being able to monetize that in a way that reaches more people is where we need to go but I think a lot of it comes back to education and so from our perspective as people who work in the financial in the capital Realm we need to get out of this mindset that a business is going to pass one to one right owner to owner or owner to maybe management team because that might have worked two or three generations ago right but more and more what we're finding and this is where the opportunity is is that kids don't want the business and so we have a huge opportunity to expand that wealth outside of and and as Ben said earlier he and I are very lucky right we can walk into a bank and get a loan easily we're white guys right we're the easiest you know the way the laws have been set up we're the easiest people to lend to but not really it's just the way that it's been structured and so the idea here of getting an asset and transferring it and educating the owner that you can exit this business you can take out of it some wealth that's great good for your family intergenerational wealth and give the opportunity to your workers to then have their own intergenerational wealth that is a powerful message yeah so so what's limiting it now I think is some of the things that we've we've touched on before a lot of it goes back to policy but I think a lot of it is that the people in positions at least in the finance sector are stuck thinking about the way that things have always been done right we're going to do this because that's the way it's always been done and you have to break out of that mindset and so from our perspective and and again everybody does their little thing right it's a drop in the bucket but if everybody does it then the bucket fills up much quicker and so education when we go and talk to a trade group or an association it's about bringing up this worker ownership option because the impediment is they bring in a speaker to talk to their if I'm a let's say I'm a purchasing group right the last thing I want is my business owner to shut down because I lose a member and I lose dues and I'm not able to provide what I should but when I bring somebody in to talk about how to transfer this asset they're going to say well there's a lot of private Equity money out there you should just sell to them well what's the first thing the private Equity guy does well he's worried about his own exit so he says okay well these employees are nice but they cost something fire them all and so that's not the model and that's where the impediment comes in because there's an education and then there's a way it's always been done which again makes money for this tiny little cohort here while it leaves everybody else with nothing thank you and and that that whole idea the way it's always been done I mean it's kind of a cliche but it's probably the biggest barrier mayor you've talked a little bit about this before but what do you see the local governments what's important for the local government's role in building this ecosystem and and what are its limitations yeah I I'm a Believer in local government I'm gonna try to sell you that if you see any like when you look and see some transformational change happening uh too often it's not at the federal level or at the state level I give you nine to one odds uh that it's at a city level or at a local level uh because local levels across the local leaders across the country doing this thing I'll just pick up on exactly what you just said we're really comfortable we have to just acknowledge we're really comfortable with things that we're used to that's what the definition of comfort is right um what we're used to is deep poverty what we're used to is inequity what we're used to is disparities and so we have to we have to figure out how to balance our discomfort uh with the processes against our I'm sorry our discomfort with the outcomes against our comfort with the processes and so I think at the local level the biggest challenges for us the biggest limitations for us are really our creativity and our courage um cities spend an enormous amount of money and one of the core things we expect cities to do is to focus on business Recruitment and Retention we do that that um but of course when we um uh transfer money when we train and and Truth we have a very significant history transferring wealth a very significant history it's not even a new body of work for us um but when we transfer wealth uh to a corporation when we transfer wealth to large entities where we transfer wealth with to an individual person who's a developer and has millions of dollars to bring to the table that's laudable uh but so I told you a little bit about our guaranteed income pilot we're in in the process right now uh we have 333 families who are receiving a 500 monthly benefit unconditional cash transfer for a period of two years and when we launched that um one of the guys who ran for a lieutenant governor last year in Minnesota he's a former Viking so literally a multi-millionaire um who you know got on Twitter and you know railed about how you know some people have lost appreciation for the value of work um I usually know what people mean when they say some people um um and this is a guy who literally got a 60 some thousand dollar forgivable loan for his two-person public speaking business in which the other person is his wife right and he's and I tweeted back at him I'm like look our families those 300 through 33 families will just take your same plan if you don't like our policy like I'm sure they'd be happy to do what you know to Value work the same way you do but I I suggest I would suggest I don't think anybody on the planet is a better money manager uh than a low-income single black mom nobody and so all that is to say is like our creativity to say look we're talking about a new um a new application of something that's really an old muscle for us and then our courage to say you know what we know we're going to get criticism anything new always will by definition we know we're going to get criticism but we believe in this enough to push through it and and what I've seen over the years mayor and I've seen it from your own people is like the courage is not just from the mayor it's from the people that work for the mayor that the mayor is emboldened to have the courage to do what the mayor wants and it's true and it's and it's about the city right it's about the city believe me we are really good at yelling at elected officials who we disagree with we're less good at calling the person who's putting forward a proposal that we agree with and saying hey we've got your back but that is so critical and that is so important and let me tell you you know we sort of dipped our toes in the water by eliminating late fines in our libraries and we had that conversation I talked about earlier and our city decided okay we're with you on that so we you know launched College savings accounts and I said okay we're with you on that we eliminated late we eliminated water shutoffs for non-payment and I said he said we're with you on that so by the time we got around the guaranteed income our city was like uh yeah we get what you're trying to do and we support this body of work and so we're able to move this body of work and the truth is it doesn't require an enormous amount of Courage for me because our community follows that and our community gets uh and and it's not just from my communication but it's because we have all kinds of advocates in our community who are telling the same story Paul philanthropy [Applause] um yeah thank you I think there's a number of things that philanthropy can do but first and foremost to State the obvious um just put more money into the fields right um definitely give grants and and in particular I think what the employee ownership field needs is more Grant makers who will give the resources and the space um for for exploration for test and learn so we could figure out how we can scale this in that multi-year commitments General operating commitments right really being a trust-based funder um and not expecting this work to show immediate results in one year and then kind of cutting the funding so so really thinking about how we can improve as Grant makers number one um I think the second thing is really helping with that influence piece that Ben had mentioned um philanthropy field foundations they have a big platform and employee ownership is just not not nearly as well known as the potential that it offers um so 100 I think all of us in the philanthropy peeled field you know need to get better at using our platform to be shouting through the roofs like hey this can do so many things this is part of so many solutions um the limitations where I see and this is particular I think to some of the challenges of how philanthropy Works which to steal the word of the days right part of another conversation um but I think you know the super power of employee ownership is that it can do so many things and I actually think it can appeal to so many different funders um but the Kryptonite is that so many funders might say I'm a Workforce funder so I just care about the job quality aspect of it or I'm a wealth building funder I care about the wealth building or I only do local business development so that's really the only piece I do um and that really limits the ecosystem which we have to build so a hundred percent I think funders need to understand that they might be funding this for one specific reason but we all have to work together to build this ecosystem and that means understanding all of the potential of employee ownership um and all of the things that need to happen to build a scale well let me ask you something follow up on that one of the things that yeah give her Applause to one of the things that always kind of was mind-blowing for me was that philanthropy and I'm making a broad statement but it's largely right um there's exceptions like you uh like the sponsors basically and that's three out of many many and it's for some reason businesses business growth employee ownership is doesn't seem to be a philanthropic activity for people yet funding you know a a training program or a financial literacy program or like programs are good wealth building ways for people to actually build wealth for themselves not philanthropic why and do you see that changing at all um yeah there's a lot of reasons so a hundred percent um I I think part of it is that philanthropy as a whole is much better at programmatic funding than they are at systems change funding um and that's a problem no matter what topic we're talking about um and and part of that is because how um philanthropy is structured in that you know we in essence as a program officer right we're making a case to a board or to our leaders and they more easily understand the tangible results to say hey I trained 10 people versus well I had it convening and we we did narrative change and maybe we convinced some people to understand why this is more important um so I always you know the approach I always take to my partners is just to be candid about that and say hey we want to do systems change help me figure out how to make this case help me figure out storytelling because it's a storytelling exercise size more than anything else um and I think philanthropy just has to have more courage to get creative with how they tell the storytelling to support systems change and Paula will have me help hate me for saying this but when you go to your funders who don't know Paula and Prudential and whatever it is to the extent that you can say this isn't crazy the Prudential foundation and financial they do it and if you're willing I'm happy to connect you to Paula who's a national funder doing this stuff not for money but for validation that that this is something doable and and the other thing I've learned in doing National stuff is somehow people are more impressed when someone nationally tells them it's okay than if someone in the next door tells them it's okay and so use it sorry Paula but use that um so I know we don't have that much time but I thought maybe we could spend some time just having everybody starting with you Paul will go back the other way just talk about what do you see that you are encouraged by whether it's in philanthropy or anything else in the evolution of this ecosystem or field there's a lot of people who are saying hey I want to learn about this particularly in the wealth building space um a lot of the work we do is really around how do we find these these big wins they're the big bets or the things that are scalable to address right all of the income gaps and wealth gaps that we were talking about earlier um and I'm starting to see people saying hey employees play ownership is one of those tools in the toolbox so that really excites me I honestly think um this this is the moment right this is the moment for employee ownership the other thing I would say that I'm starting to see and this is something I'm personally interested in it's kind of nascent but it's growing um people talking about the shared ownership economy and linking all of these different things as we talk about you know Equitable asset creation intergenerational wealth building and by that I mean linking everything from employee ownership to um home ownership shared Equity options or commercial Equity uh real estate options or even things like uh the Alaska Permanent Fund like citizens dividends right what are all of these shared models that can really uh you know jump start what we need within the you know by 2045 or whatever um and and in a lot of rooms employee ownership is being mentioned in these same conversations so that's exciting that's nice mayor what what are you do you see happening in the city or anywhere that gives you encouragement yeah I'm I'm really excited about just the extent so which uh the momentum is on our side it feels like the momentum is incredibly on our side in Saint Paul and across the country we've seen things happen in the last couple of years they're literally just like five years ago when I first got elected mayor just didn't seem feasible or plausible um I mentioned uh our guaranteed income work and one of the national co-chairs of an organization called mayor's for a guaranteed income up thank you five years ago uh mayor former mayor Tubbs mayor Stockton California I started this guaranteed income pilot and the country was like look at that guy like doing this weird thing like in isolation uh today uh literally yesterday we signed up our 106th mayor uh as part of the pilot and we've got uh over four dozen city-run Pilots uh across the country uh moving dollars to a significant groups I told you guys about my about the Rondo community that I grew up in completely neglected to tell you that literally last month our city council passed our proposal called The Inheritance fund to provide up to one hundred and ten thousand dollars in fully forgivable financing to help descendants of people who lost properties on Old Rondo purchase a home or renovate an existing home and just the app the appetite that exists across our country for this like for like radical movement toward a shared economy seems to be like really incredible um the the the the the the the ways we've come just over the last few years uh creates incredible hope for the ways that we can come over the next few years if we don't get tired add to that for a minute what's really important is the one thing I've learned in the pattern recognition is generally speaking people are risk averse not a surprise and if you can give them at least one example of where it's worked before like the level of calm that comes into them right so when you can point to Saint Paul like they've done that you know you point to Prudential they've done that it is amazing so being able to have those examples which is why you need the this the network is really it's almost it is in many times and we had a network of Mayors and their Chiefs of Staff that we did at Living City St Paul was active from the beginning and what we found was Mayors love to steal the ideas of other mayors tell that mayor they stole it and that they did it better but attribute the fact that they did it first right that actually why nonprofits don't do that why others don't do it that's what we need it's like steal improve attribute all of my best ideas happen about 30 seconds after somebody just said Sam what what do you what gives you encouragement yeah well just to finish up on that point you're you're right I mean it's stealing ideas is it is a great thing so do it it really is important and bring it back to wherever you're from um so from my perspective this right this room is really cool and and so last night if you were at the dinner it was funny because they set the food out there but nobody wanted to go first right and everybody who is sitting they're focused on their own things sometimes thinks boy I'm working uphill right and and you get in a room like this and you realize no I'm I'm not uh you know we may still be working uphill but I'm not alone and I think that's really a powerful message for all of us to take back to our communities because of the fact that yes I put my blinders on I do my work you know take care of my kids be nice to my wife all these things and they're great but yeah well no you're right they're good um but it's having the ability to then pick my head up and say wow I've got people at a local level people at a state level somebody in the foundation world that I can reach out to we can share ideas and we can find a way to bring that education where we need to so that the people who are currently in the positions start thinking a little bit differently because that's that's where it's going to start and and uh you said it earlier mayor about the the comfort right and and too often we're comfortable doing what we're doing and that doesn't really make any change long term so but yes see seeing a bunch of people who who want this to work that's really exciting and I'm going to add one thing to that too which is so once you've met the people here or wherever it is if you well like them and you think they can help you meaning they can answer a question or whatever it's do it right the one thing I've learned in all the years is people actually like to help other people and they don't know they know stuff that others want to know you know so so reach out and one of the the best things in the world is knowing people all over the country who are doing what you're doing you know you're having a terrible day you reach out they're like oh I just had this great success you feel better right but it does take that taking the step and and most people want you to take that step and the ones who don't you don't want to know them anyway um director what do you see that gives you encouragement other than your your appointment and the passage of the law um what what do you see that gives you encouragement um what encourages me I think there are a couple of things that top the list because there's a lot actually to be encouraged by and I think number one um the silver lining in the pandemics of um are first of all the recognition of the importance of small businesses to our economy as a whole for the first time I mean those of us that have been doing that work like this in the ecosystem for years we've always kind of been the little dogs right in the community now there's recognition that small business we are the big dogs two-thirds of all net new chops right so we are the big dogs in the economy when we come together collectively so I am very encouraged by that um which leads me to point number two I am encouraged by the conversations about equity because to me they are inextricably linked to something I talked about in my previous position which is self-efficacy we have seen for far too long that philanthropy government Etc that the investment in our underserved communities and folks that often share more than one marginalization point um that has not been there and now there is investment in communities in organizations and a recognition that if you can help black people black people better be receiving some of that money and authoring some of those solutions to help black people likewise my Latino brothers and sisters my asian brothers and sisters American Indians on and on and on if we are going to empower it starts with those transferable assets it starts with funding the institutions like project Equity right that have a stake in making sure that the folks that we say we're going to help are indeed at the table helping to author those Solutions and then the third thing that I would say I'm very encouraged by because I have the best job in the state of California I really do I really really really really do um I am encouraged by the work of my office when I took over this office I'm from a predecessor who is now part of the Biden Administration we only had five employees and we now have 20 employees in our unit [Applause] the largest small business coveted relief grant program at 4 billion dollars we used to only have two core programs we now have 14 and can I say I cannot wait till we get to implement SB 1407 so those top the list of my things that I'm encouraged by all right I think that's a great way to end our panel uh those inspiring words um thank you all for being here thank you for what you're doing uh to make this a reality [Applause]