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142: Certified EO - Charting New Paths

Bret Keisling is joined by Certified EO’s co-founder and CEO Thomas Dudley, who shares its great member services including training and education, its important and exciting Directory of EO companies, his EO A-ha Moment, and more.


Episode 142 Transcript

Bitsy McCann: 00:03 Welcome to The EO Podcast, where we amplify and celebrate all forms of employee ownership.

Bret Keisling: 00:12 Hello, my friends. Thank you for listening. My name is Bret Keisling and as it says on my business cards, I'm a passionate advocate for employee ownership. Certified Employee Owned, more informally known as Certified EO, is a tremendous organization that's accomplishing a lot in just about five years of existence. In this episode, you're going to hear what they're doing, how they're doing it and why they're doing it.

Bret Keisling: 00:38 Certified EO provides tremendous training and educational materials to its member companies who are, of course, certified to be at least 30% employee owned. It also has a directory listing of thousands of employee owned companies, and the directory continues to grow. This is a great resource for anyone who wants to find employee owned companies, whether as a consumer, looking for B2B contacts, or even job seekers who want to work for an employee owned company.

Bret Keisling: 01:09 Last week on Episode 124 of the ESOP Mini-cast, I used an excerpt from this full conversation. So if you're a regular listener, if you hear something that starts to sound familiar from last week, feel free to jump ahead about seven minutes or so. With that, I bring you Thomas Dudley.


Bret Keisling: 01:28 Certified EO is an amazing EO advocacy organization doing really important and cool things to help grow the EO sandbox. And it's my pleasure to be joined by Certified EO's co-founder and CEO Thomas Dudley. Thomas, thanks for coming on the podcast.

Thomas Dudley: 01:45 Thanks for having me Bret.

Bret Keisling: 01:45 For the last six months, Certified EO has come up probably in half a dozen to eight of our podcasts. Guests from Rodney North to Jennifer Briggs, Tracy Till -- a whole lot of folks are talking about Certified EO, and I'm really grateful that you've taken the time to talk to us today.

Thomas Dudley: 02:04 I'm really glad to be here.

Bret Keisling: 02:06 So we'd like to start the podcast with our guests, Thomas, with their EO "A-ha moment," which is when they either realized or began to realize that employee ownership was a little bit different. And, so, tell us yours, and I understand that took place while you were in grad school. So tell us how you got to grad school and what happened there.

Thomas Dudley: 02:28 Yeah. So for me, as you mentioned, my interest in employee ownership really did build when I was I was working on a PhD in organizational behavior at Stanford Business School. I had originally gone to business school and started this PhD program with a number of questions related to how business and organizations impact lives and ultimately have impacts on some major societal questions like wealth inequality and -- if you just think about it, you spend so much of your life at work and has such a big influence on people's lives and a lot of these big outcomes.

Thomas Dudley: 03:02 And so that sort of vague, but general interest got me into grad school and got me interested in doing more academic work on the role of business and how business functions and how that has these downstream consequences. When I went in on, you know, day one, I definitely had some broad sense of worker ownership, maybe a little bit more of an interest on the co-op side. So not just work around businesses, but general like purchasing co-ops producer co-ops, those sorts of things. But in graduate school learned about, first of all, got plugged into the academic community on the employee ownership side. So Joseph Blasi, Doug Kruse, the Beyster Symposium. So all those sorts of great things. Ended up getting a Kelso Fellowship from the Employee Ownership Foundation for some research on employee owned business.

Thomas Dudley: 03:51 And so as I was getting plugged into that community, I started reading more and more of the academic work, which does focus a little bit more on the ESOP side and the share-based plans, simply because there are so many of them. And so I started reading all this great academic work on the wealth, building, the performance advantages, all those sorts of findings we all know about. And the big thing that struck me was, well, why have I never heard of this before? Prior to grad school, I was a management consultant. I was working in with businesses and very immersed in business but just had never heard of this in my day-to-day life. And then here in grad school, I'm learning about all these different advantages of this model. It seemed like the answer to a lot of big problems that are out there, it scales, it works at all sorts of different companies. The more I learned, the more I found out about businesses that are employee owned, right?

Thomas Dudley: 04:36 So just kept learning more and more and more and pulling at this thread. And it just, this, this idea has such depth and there's such a proven, there's this track record, all of these companies that are employee owned and everything. And so started being a huge nerd essentially, and like downloaded the [Department of Labor] DoL data, digging into all that. And kept finding out about businesses. I knew about the were employee owned that I had no idea! And that actually still continues to happen, even though I've spent now four or five years just digging through this data and just going really deep.

Thomas Dudley: 05:04 And so I think my "A-ha moment" was somewhere around there where I started seeing these different companies and saying, oh, I didn't know that company -- like, Wawa I didn't know Wawa was employee owned. I didn't know, I even a few years ago after leaving grad school, which we'll talk about, and starting Certified Employee Owned, I was living in downtown Oakland in an apartment building and I like coffee, I drank a couple coffees every day, like going to a coffee shop, like employee owned businesses and maybe a year into living in this apartment someone told me there was a coffee shop about three blocks away that was employee owned that I had never heard of. Didn't know about it at all. And so I, at this point, having spent years sorting through all the different data on the businesses, probably top five in terms of people who just spent time looking at that, if I'm finding businesses three blocks away from me that are employee owned -- things that I really like that I didn't even know about -- just imagine the potential if we can get everyone in America tuned into this idea and just make the visibility of this as easy as, say, finding normal restaurants, normal businesses, right? And just have this fully integrated into the way that people think about the businesses they shop at. I just think there's tremendous potential there.

Bret Keisling: 06:10 A couple of years ago, I did a podcast where I've traveled back and forth between Pennsylvania and Colorado by car extensively. And one of the things that I noticed as I traveled through, there was no way to identify what employee owned businesses were in the area restaurants and that sort of thing. Certified EO has set up a wonderful directory that we'll talk about, but I love the fact -- I'm just referencing it -- because the germ of the idea here was this great place a couple of blocks from you, you had never heard of has been implemented in your, your mission with Certified EO.

Thomas Dudley: 06:45 Yeah, absolutely. It's funny launching, and we'll talk more about the directory. I think it's a really great example of what we're looking to do, especially our bigger mission in terms of creating that national recognition and ultimately helping everyone in America understand that this is an option, right? And really see this as the way that business should work. So that visibility is the origin back in grad school, we've taken a little bit of a path to get to where we are today, but then just last week launching this directory which is not -- which will help consumers and you can use it to find businesses near you to shop at, but you can also use it to find businesses, to go get a job at right nearby in your industry. If you're a business, you can find other businesses to do business with, or other employee owned companies in your industry and state that you could partner with or talk, talk to. Or we had a member who was looking for a board, someone on their board with experience on employee owned businesses in their industry in their state.

Thomas Dudley: 07:40 So it has more use cases. As you all know, 80% of businesses more or less, are, are not consumer facing. And so the consumer side is this very visible, kind of the tip of the iceberg in the employee ownership space and then once you start digging, you learn about all these great manufacturing firms and engineering firms and construction firms and distribution firms. Every single aspect of the economy has some employee owned businesses in it. And so this directory is a great way -- it could help you if you're driving on a road trip and want to support companies nearby along the way, although we might have a little bit more data to put into to help you really, really realize that vision. But it's also extremely useful for people just look in generally for the employee ownership space in other capacities too.

Bret Keisling: 08:24 I love that. And Thomas, if I were less disciplined, and I say that with a chuckle, we would spend the next 40 minutes talking about the directory, but I'm going to try and do a little bit of discipline and make good use of our time. We will get back to it.

Bret Keisling: 08:38 When you formed Certified EO in 2016, what was the intent and what do you mean by "Certified EO"?

Thomas Dudley: 08:48 Yeah, that's a great question. So the big intent is really, as I mentioned, to create national recognition for employee owned business, and there are many people in the employee ownership space doing all sorts of great work. Our unique contribution is focusing on, on really the Main Street audience, the normal person, helping them.

Thomas Dudley: 09:07 First of all, helping our community, tell this story in a way that resonates with millions of people, people who are not financial experts, who are not necessarily business owners looking to sell, but just more and more regular folks. And helping them see, well, hey, first, this is an option. Second, there are a lot of companies doing this nearby. If you buy these products, you can help your local economy. If you go and get a job here, it can create a financial opportunity for you and your family. Right? If we base our economy around this, it's going to anchor businesses in communities and create more stability. It's going to recession-proof some towns it's going to root these businesses locally so that factories don't don't move as much.

Thomas Dudley: 09:44 So we want people to see the opportunities, both for them individually, but also for their communities. And I think by doing that, we can help create this broad base of support for this idea, which will help everyone in our community. Ultimately, by doing this, we will reach business owners. So we will help facilitate more conversions to employee ownership, to grow the space. We'll drive more resources into existing companies to help them grow and grow the space. We'll make everyone's job easier, in terms of that outreach. If everyone already knows about a couple of employee owned companies and has this positive opinion that'll help when other folks are reaching out to the business owners, that sort of thing.

Thomas Dudley: 10:21 So, the big intent is combining the reach of all these different companies to start this drumbeat of support and do something that'll be good for the whole community, but that we can only achieve through this coordinated effort by working together.

Thomas Dudley: 10:31 So that's our big, our big picture. And that was what we were thinking about when I was in graduate school. The link there is between discovering this idea, having that "A-ha Moment," and then coming up with this idea, I got interested in public opinion on employee ownership. So was in graduate school 2015, 2016 actually got involved in the Fifty by Fifty initiative with The Democracy Collaborative as well. So I was on that team as the researcher and doing that work. And I was lucky enough to sit in on this great convening where all these different people from like Loren Rodgers and Corey Rosen from the [National Center for Employee Ownership] NCEO and Michael Keeling from The ESOP Association and Melissa Hoover from the Democracy at Work Institute and all these different people from all over the space came together to talk about all these different ideas and I was lucky enough to be in the room because I was part of that Fifty by Fifty initiative, helping do some of the data and all that

Thomas Dudley: 11:21 And something that struck me both after that meeting but then also as I was thinking about this idea, was just what do, what do normal people think about this, right? I get, there's this very passionate community. I get there's these true believers who see this and I'm one of them, but what is, what is the normal person thinking? And so I looked for research and I had seen some people who had studied this at the time, maybe like 20 or 30 years prior in the eighties, maybe the nineties, but I didn't see anything recent. And we've had some great advances in survey technology. So I used the Google Consumer Surveys platform to run some quick surveys of public opinion on employee ownership, wanting to understand consumer sentiment, but also job seekers and found really strong support.

Thomas Dudley: 12:01 I found consumers as interested in this as fair trade and organic, I found job seekers about twice as interested in employee owned as a great place to work. So found this really strong, positive support. And then this kind of links with the question of, well, how do you actually even find these businesses? Right?

Thomas Dudley: 12:14 And so the idea of the certification program is this is a proven model to create that visibility. And what you're doing is leveraging the reach of all these different businesses. I think ballpark there's about $300 billion in revenue among companies that meet our certification standard and are employee owned. That's huge reach, right? If we can get everyone on the same page with the same mark, the same simple message, that's how we're going to get this out there and get this in front of those 300 million Americans. So that was kind of what was forming in our head in terms of the motivation for the certification program.

Thomas Dudley: 12:43 Obviously to have such a program, you need to have a distinction. What does it mean to be employee owned? Our intention with that is not to be the arbiters of who's a good employee owned business and who's a bad one. No one really cares what we think on that level, right? This is a means to an end. It's not about us being the gatekeeper, but you do have to have that. And so big part of 2016 was reaching out to people to have that conversation and try to understand, okay, what does it really mean to be employee owned? And where should we set that standard?

Thomas Dudley: 13:10 We probably talked to about 150 people, companies, service providers, trade associations, I mean all, all over the space. What emerged was -- and actually, it's funny, I have a blog post I'm going to put up on this in, actually, a week or two -- but what emerged were basically three categories, right? There's money as an aspect of employee ownership, there's involvement in decision-making, and then there's involvement in governance and different people across the space have different opinions on like which of those three is important and to what degree, but what we found is that the big common thread is the money side. And really if you aren't creating that wealth building for everyone in a broad based way, it's hard to say that's employee owned. And you might think there are other things that need to happen as well. People might disagree with you, but I think everyone, at least the common thread we saw in those conversations was the financial aspect is really what is the common thread across all of these different aspects of the community. And the wealth building is really, what's going to move the needle on wealth inequality as well, which is one of the strongest motivations here is, is addressing wealth inequality and creating this more egalitarian or open way of doing business that has broad-based benefits and doesn't just benefit a few people.

Thomas Dudley: 14:24 So with that in mind, and kind of based on this broad consensus or not even consensus, but these 150 / 200 conversations we had, and trying to pick out the common threads there, we ended up setting our certification standards around significant, broad-based ownership. So significant would be at least 30% of the business owned by employees, excluding founders. Broad-based means access is open to everyone and concentration is limited. And we have more specific criteria that underlie that. Now some people hear those standards and they say, wait, we're a hundred percent employee owned, why 30? That seems low. Or, hey, we have you know, in the worker co-op space, people might say, well, we have our employees on the board, right and that's, that's much higher. And that's true. But if you zoom out to the broader economy about one in 200 American businesses meet our standards, right?

Thomas Dudley: 15:11 So it's only half of 1% of businesses that are 30% broad-based. So this is a very high bar when you start thinking about what the status quo looks like. And on top of that, from the certification standpoint, given our mission, it's really a means to an end here, we need enough reach to actually reach 300 million people in America. And so it, I think it's, both for those sorts of pragmatic reasons, but then also in view of the fact that it is a very high bar we ended up setting our standards there.

Thomas Dudley: 15:39 Now that's not to say that a company that's 29% owned is like a bad company; you can be doing all sorts of great things and building all sorts of wealth for people there. Similarly employees owning a hundred percent of a business that's failing is not going to really help people that much necessarily. I mean, that's a very unfortunate situation. It happens. Businesses are always going to be - there will always be some businesses in trouble, there's nothing we can really do there.

Thomas Dudley: 16:01 But setting the line at 30% is what made sense and on top of that, there's obviously the historical precedent there with things like 1042.

Bret Keisling: 16:10 Let me circle back -- and just one of the other things that I liked when you talked about public opinion, how people feel about employee ownership. My son, Brian worked for me at Capital Trustees and was the producer of the podcast and host of the Mini-cast for the first couple of years in existence and he used to make this point that when you talk to people about employee ownership at conferences, it's the best thing since sliced bread. And if NCEO or ESOP Association would call on a company and say, what do you think it comes off very, very favorable. The point Brian made the, has just stayed with me is, but are employee owners going to Thanksgiving and talking it up among their family members? The examples, I think you used, were its as popular as for example, people who are into organic foods. Guaranteed at Thanksgiving, someone who's an organic food eater is talking about it. If they're into CrossFit, the same kind of thing. But that's part of the challenge is when we're addressing employee ownership, it gets rave reviews, but it's that undercurrent that you're trying to address of how do we make it more top of mind?

Thomas Dudley: 17:20 Yeah, that's a great, that's a great question. And I think there's a few different approaches here. As far as the people going home to Thanksgiving. I think it kind of, well, one big challenge we're facing is that many of the people working in these companies don't actually really understand what this is and how it works. Because it's, especially when you start thinking about the method that out, that's out there, that's the most common, obviously is the ESOP. Very successful vehicle, huge amounts of wealth built for people. But it's ownership of a liquid private company stock through a trust -- and people just have no, normal people have absolutely no experience with that at all. And they don't know anyone who has any experience with that either. So you start telling them about this and it's very, it's a challenge.

Thomas Dudley: 18:05 And one thing we've done really to start, when you think about building that national recognition and getting this on the radar of, of 300 million people, we're not just, you wouldn't just start by going out on the street corner and shouting about this or something, right? You need to pick your, pick your battles and pick your audiences. And so one thing we noticed very early on is that a lot of companies are having trouble explaining what this means to their people in a way that is clear and simple. I think there's a great understanding, a lot of it's just, it's very technical. And so how do you distill this down and make it clear. And so that was actually the first challenge that we've been tackling is how do we help our members deal with these, these sorts of challenges that they're facing inside the business? How do you help them have those sorts of initial conversations? How do you help them answer or address the common misconceptions? How do you make this clear and simple? How do you help people visualize that long term wealth building? Because people have no intuition for what compound growth can do for them over time.

Thomas Dudley: 19:01 And so, and on top of that, frankly, another thing is the structure of the ESOP transaction. Since it is an owner initiated transaction, oftentimes you'll have an HR person or communications committee in charge of doing that education, who also don't really understand what this is and how this works.

Thomas Dudley: 19:15 And so we've seen a lot of different companies facing these same issues and it links well with our expertise, which is making this clear and simple and messaging this very broadly. And so what we've developed is a whole set of tools and resources and train the trainer materials that help the champions inside the company address those issues. And rather than say, reinventing the wheel, building something on their own, they can tap into the templates that we've developed working with other companies so that they don't need to reinvent the wheel. They're tailoring something that's already been successful somewhere else, spending 10 or 15 minutes tweaking language instead of 10 hours starting from a blank page, that sort of thing.

Thomas Dudley: 19:52 So we provide all these tools, handouts, infographics, games, newsletter articles, postcards, posters. We've gotten this great online interactive wealth calculator. It's all fully customizable. So it has the company's logo, photos. We tweak all the language, everything like that. But we have a lot of scale. We're working from templates that we've already worked on with other members. And so we really do have the customization process is very streamlined anywhere from a click, if people just want us to drop things in kind of basic, or all the way up to like 15, 20 minutes of their time, if they need more, more iteration.

Thomas Dudley: 20:22 We also do a playbook. So, regular webinars on all these communications challenges, help people build a 12 month plan, provide hands-on support with our team who work with a bunch of other companies as well - so have that sort of expertise.

Thomas Dudley: 20:34 And then we also provide some of the network benefits, the things more focused on like the broader, bigger picture mission also help within the company. Like using our certification mark connects their employee ownership to broader community, this broader movement. It's not just something that management invented, right? It's Oh, you see that mark on the WinCo foods trucks or the Modern Times beer cans, right? So, you know, there are other companies out there doing this.

Thomas Dudley: 20:57 The directory is another thing as well. That's a nice internal resource. So when you convert to employee ownership, you can say, hey, look at all these other companies that are in our state that are also employee owned, and maybe you even heard of a few of these, right? Go look at the grocery store, the grocery section, see what you could actually go buy at the store, right. And just kind of making that, that movement also helps there.

Thomas Dudley: 21:17 And so a little bit of a long way to get back to Thanksgiving. But I think one reason we're not quite there yet is, I talk about it at Thanksgiving and I'm sure you do too, but we have, I think about 2 million people working at companies that meet our certification standards, that 30% employee owned, but I don't know how many of them really have that deep understanding. They might not truly understand. Obviously the people who are at the conferences get it and they love it. And those are the true believers. But getting those 2 million employee owners excited and interested is, I think, part of how we get to that 300 million Americans being aware of this idea.

Bret Keisling: 21:56 Compliment the educational component of Certified EO. Doug Schukar who's the founder and CEO of USA Mortgage was on the podcast this fall. Vince Kruse, who works there has been on a number of times. And Vince is one of the go-to people at USA Mortgage for ESOP related stuff and Vince has raved about your educational components, the modules, the training. So I just want to reiterate for companies that are listening to this and talk about a value-add, your educational materials come highly recommended.

Thomas Dudley: 22:34 Well, I really appreciate that. There's really no greater, no greater compliment than hearing a member say that. So that, that means a lot.

Bret Keisling: 22:41 You've got the educational component. Are there other member services in addition? Does that pretty much sum it up?

Thomas Dudley: 22:49 I think that's the general overview. It's, there's really two components to how we work with people. There's the big picture, right? Focusing on that national recognition, obviously starting that drumbeat is going to be good for all our members. We have people who sign up simply because they want to use the certification mark. They want to use the marketing resources. We have social media templates. They want those external tools. Other folks, yeah, there's -- we have some members where it's more on the internal, the education piece. A lot of companies need to start there and then the external piece comes later. Once you spend a few years building that culture, building that understanding, it makes a lot of sense.

Thomas Dudley: 23:22 We had one of our founding members is ButlerTill, a great employee owned advertising and marketing agency. And we had some of their folks on, including Amanda DeVito, on one of our recent webinars. They've been employee owned for roughly a decade. They do an amazing job. I would highly recommend people checking them out. But Amanda was making the point on that webinar that you really need to build that internal culture. The webinar was about marketing, right? But we started with communications and culture because you need to build that culture. If your people don't get it, if they don't understand and see, see what this is and have that have that understanding and your clients you're talking about with job seekers, it's going to come off as inauthentic. And so it really does start internally. And so with a lot of people, we do, we do start internally as well when it comes to the member benefits.

Bret Keisling: 24:10 If you would address something for me, you said something that I think is important. My first three years in employee ownership was as the CEO of an employee owned company, 50 employees, $20 million revenue. Then I spent seven years as a trustee started the podcast four years ago. And for the last two years, I'm doing the podcast. I may return on investment guy as a, as a trustee, couldn't pay more than fair market value at risk of personal liability. If a decision went bad, et cetera. And I spend a lot of time talking about the culture of employee owned companies. And could you address for just a moment? Sometimes people think it might be warm and fuzzy. Oh, we want to like our jobs. And first of all, right. We want to like our jobs, but would you agree that the culture is the fabric, the foundation that actually leads to a more profitable company? Can you just chat about that for a moment?

Thomas Dudley: 25:12 Yeah. Yeah. Culture is a big topic. Absolutely. it can be a hard topic to speak about generally, in my opinion, just because it varies so much company to company, but you definitely hear quite a bit. And there is that kind of understanding. And a lot of the academic research is aligned with the idea that in order to unlock the performance advantages from the company perspective, it's not enough to just give people shares, you also need to have that culture of ownership. You need people to think and act like owners to make, to make a difference. And that makes a ton of sense, right? Just giving people these ownership shares, and what we found in our experience, you give people some liquid shares in a private company. You give them a statement once a year. You don't really talk about it very much. Then it's like, basically, like it doesn't even exist.

Thomas Dudley: 25:56 In fact, that might be some of the power of the ESOP model is that it is so similar to what people already understand about how work works and how to do that. That it's not, it's on a day-to-day basis, it's not a major change, right? Obviously it's a transformative change in terms of the, the proceeds of the business and the benefits. Right? Go ask a former employee owner at New Belgium who got maybe a few hundred thousand dollars after that transaction, if it's different. Right?

Thomas Dudley: 26:19 So from the wealth building perspective, it's the financial components, the money that matters in this transformative. From a business performance perspective, it makes perfect sense. You need to influence some change in people's behavior.

Thomas Dudley: 26:31 Now, I think it's possible even for businesses that operate culturally kind of like a let's call it a 'normal' or a, not a normal, but an investor owned or public owned or founder owned business. If you can get people to understand the long term financial opportunity and reduce turnover, right? Turnover is extremely costly for business. So you can drive increased business performance simply by getting people bought in on the financial aspects, helping them see that we're all in this together financially. If you stick around here, you have an opportunity that can change your family's life. And if you reduce turnover that way, you can actually drive substantial business performance without doing the involvement in decision making, that sort of thing. At least in theory, right? You'd want to go see if people are actually doing this, if it actually works, because I'm still that academic nerd at heart. But that's the theory, at least.

Thomas Dudley: 27:16 The culture piece, I think, yeah it's - I generally agree with that statement. That the culture piece is really what's needed to make the business perform better. And it makes perfect sense. Right? Because I've talked about some of the exceptions, but at the end of the day, if your company is going to do better, that has to be somehow related to people who work at your company, doing something different or doing something -- perhaps working harder, perhaps contributing more to idea sharing, right? Implementing some sort of open book management or idea sharing system that changes some day-to-day function. Right?. So, it makes perfect sense once you start thinking about it and that also lines up with the academic work on employee on business finds. Generally, you don't find again, in academic studies, so zooming out to like, you know, a thousand companies and maybe they're 30%, but maybe it's kind of the big public company with a few percent. So it's not a hundred percent maybe generalizable to the companies we work with. But generally the finding is, yeah, you need these, you need these open book systems. You need that, that understanding to drive that company performance. And that's what we find ourselves working on with a lot of these, a lot of these companies is it's -- the challenge of course, is that every company its culture is very different. And so that execution varies a lot business to business.

Bret Keisling: 28:30 Tell us a little bit about Certified EO, the number of members you have, and as I've been to your website, your organization, and your team members, you've got a really strong EO vibe. Even among the bio's and the people seem to be true believers. I imagine, A, that makes it fun, but it also adds passion to the mission.

Thomas Dudley: 28:53 Yeah, absolutely. No, we have a great team. I'm so excited about everyone that's joined and the opportunity to kind of help more people get involved in this space and we've had, yeah, everyone's just super. Yeah, everyone on our team is fantastic.

Thomas Dudley: 29:05 So we launched the organization in September, 2017, officially. That's a little over three years ago. Today we have 240 members. So we've got some large consumer facing companies. Like we mentioned, Wawa, WinCo Foods is a founding member, Davey Tree, Modern Times Beer. So some consumer facing companies, a lot of companies you can just see out in your day-to-day life, but 80% of our members are B2B manufacturing, engineering, construction, distribution, professional services all sorts of different industries.

Thomas Dudley: 29:33 Small member for us, smallest, would be like five employee owners, all the way up to 30,000, right? Huge range of sizes, but typically, fifty to a thousand? Fifty to a thousand, somewhere in there. We have, but we have many members with with multiple thousands of people. So that just kind of gives you a sense of the companies involved here.

Thomas Dudley: 29:52 The vast majority of our members are ESOPs because that is the most common structure that is used to be an employee owned business, as we've set that standard. But we have worker cooperatives, we have perpetual trusts. We even have companies doing this through equity comp or even just direct share ownership. So another thing I'm proud of with Certified EO is that again, the ESOP is this fantastic vehicle. It'ss created so much of the growth in this space, but we are setting a tent that's bigger than just the ESOP, right? We're trying to grow and really abstract away from specific vehicles to more of the what's the kind of the common thread running through all of these different spaces and frankly, what can we all do together, right? That's going to help all of us that we can't do individually. That's generally our perspective there.

Thomas Dudley: 30:36 As far as our team, we've grown. So it was originally just Kramer [Sharp] and I, the two co-founders. We did add some, some people we've added a bunch of people along the way. So we're up to seven now. Team is fantastic. Like you mentioned, there's a lot of people who believe in this idea really want to get involved in this space who see the value. So we're, we're super excited to have all those, all those people on the team. And at this point, yeah, we've got three people working with our members on day-to-day basis. Few people reaching out to companies building the content, the handouts, the program, materials, all that. And then we've got my co-founder Kramer doing all sorts of technology, all sorts of coding and technology, building all the platform.

Bret Keisling: 31:17 The directory is very exciting. We had talked about that previously. I love what you're trying to do with that. And yeah, my interest as a consumer, I'm not really doing B2B, you know, at this point in my life. So my interest is on the consumer side, but it would be really cool if employee owned companies were in the habit of saying 10% of our purchases or contracts are going to be with other employee owned companies. You know, there are so many industries, HVAC, construction, all of the inter -- you know, better than I, the makeup of your, your members. And it's a very important directory for that B2B that you're talking about. I hope it's a resource that is utilized.

Thomas Dudley: 32:04 Yeah. The directory is -- I'm so excited about the directory. It was, as we talked about, it was very core to my "A-ha moment" and what drew me into this space. It was something that Kramer and I originally, like day one, we sat down and it was really more focused on that sort of like directory visibility piece. The challenge is, it's just a tremendous amount of work. Like we could not, the two of us just doing that, it would not have been possible. But it's always been something we've been thinking about. And so for the past four and a half, five years, basically before, even before our launch, we've been thinking about how to build this directory and how to compile this of employee owned companies. But there are some major challenges. If you go download the department of labor 5,500 data, which has often talked about, first of all, if you download that, open it up and sorted by size, the first company on that list is Walmart, right? Biggest company in America with an ESOP. That's not what we're doing. And that's not what the, that's not what the true believers, the people listening to this podcast, the people who are at the conferences, that's not what people are so excited about. That's not, what's going to transform the American economy for the better, right? That's kind of the, the problem in many ways.

Thomas Dudley: 33:08 And so what you need to do, and you hit the nail on the head, is you need to go through that list and weed out the companies that maybe don't meet the standard of 30% broad based ownership, but that's not a publicly available piece of information. It's the ownership of a private business. It's very private. And so one thing we've been doing is basically going through and figuring that out. As we've been talking to companies, as we've been doing our certification, as we've been watching the news, is tagging them.

Thomas Dudley: 33:35 The other thing we've been doing is aggregating all these lists. Each year, the Department of Labor releases a completely independent file. So we've stapled all those together, shuffled all those together. Sometimes companies file multiple 5500s. You have to weed those out. The DoL tries to, but you know, they don't always do a great job. So we have to weed those out. We have to add in all the other companies, the trusts, the co-ops, the stock based plans that that would never show up in that list. And then also the data quality of that is, in my opinion, is a little suspect. So like the industry data is 50%, 70% good, but you still have 30 to 50% wrong. And so we've been going through and recoding the industry variables, right? And the headquarters, if you, if you look in that you get a state, so you don't, you only get where the headquarters is, but if you're a business and you want to do business with another company, right, you want to procure, like you said, HVAC or janitorial services from them., for example, it doesn't matter if they're headquartered in Massachusetts, right? If you're in Vermont and they have an office in Vermont that works. So we need to add all that office location. And so it's this tremendous amount of effort, and it's been in the back burner, but last year with COVID actually, and in the shutdown, we took that opportunity, that slow time, to start really making a push of putting this directory out there.

Thomas Dudley: 34:45 We thought about the consumer side initially. We thought that was a good place to start. And the nice thing is to chunk down the work a little bit. So in September we launched something we were calling "Shop EO." Which some people might've seen it. It was this -- the premise was, okay, if I'm a consumer in California, what businesses could I shop at?

Thomas Dudley: 35:03 And when we launched that and we got really positive feedback, but the most common thing people said from our members was like, hey, we want to find other companies, right? We want to find businesses we could do business with. Not even to just earmark 10% of our spending, just to be a good citizen of the community. It's we fundamentally believe we will get a better like experience with an employee owned business, right? We will get better service quality for the price. Like this is the best possible opportunity for us. We just can't find these companies right now. It's just invisible.

Thomas Dudley: 35:31 And so we got that feedback and we were, over the winter, we were like, okay, maybe it's time we go for it. And so we just decided, all right, let's -- I mean, there's never a great time, let's just go for it. And so we were like, just went back, use the downtime over the holidays to do a lot more data coding. Launched, relaunched, Shop EO as a directory, a full directory of every employee owned business in America a couple of weeks ago.

Thomas Dudley: 35:54 The data coding is still in progress. It's never going to stop, right? We're thinking, okay, we're going to take on that burden of always looking in the news to find the new companies and adding them. We're going to figure out when people sell their ESOP become non-employee owned, right. We're going to, when someone opens a new office, we'll add that. So it's never going to stop, but we are still working through that backlog a bit. And so if anyone listening to this, if you go to that directory and you're expecting to see a company, and they're not there, let us know because maybe they're employees, you know, maybe we're missing them. If you see a company that you don't think is employee owned, let us know that too, because maybe we're wrong there. If the states, the industries, any sort of help people want to give us, that's great. And we are getting our members. They're helping us. We're getting a lot of people now that we've launched this up saying, hey, what about this? What about that? We're obviously coding this on an ongoing, I mean, every day, every week, doing all sorts of work there.

Thomas Dudley: 36:42 But that's the ultimate goal is the, the potential for the community from having an easy place to go, where you can find every business you can easily browse by, well, what sort of services do they offer? Can we -- we're looking for someone to provide some services to us. Or, hey, maybe let's just look, let's just go on and check out our state, see who, we have a category that's professional and business services, something like that, so you can just go see who provides businesses to who provides professional services, who provides businesses like cleaning services that you can, you can just see who's there.

Bret Keisling: 37:14 I'd like you to trumpet just once again, because I hadn't thought about it when I thought of the directory, what a great way to find an employee owned company that's hiring! There have been several podcasts guests that we've had in the past. Larry Filipski of Once Again Nut Butter that I think is one of your members. Mike Shuey, who is a great employee owner who was with Restek. Both of them did job searches. And the number one criteria was working for an ESOP or an employee owned company. So I love, it's not that there are job postings as I understand it, but you can see who's in your industry or in your geography if working in an employee owned company is important to you.

Thomas Dudley: 37:56 That's right. Yeah. That'd be a whole other different use, right? You could be consumer doing this. You could be a business looking for partners looking for procurement. You could also be a job seeker. And that's another reason we decided to go for it with the directory is you can go on there. And like you said, you can select an industry, so select your industry, and you can select your state. And that's one of the reasons we feel like it's worth it to code all the office locations. A company might be headquartered in DC, right? If you live in California and they have an office there, work there, right? So that's why we're going through all that work is, hopefully, we can help people become employee owners.

Thomas Dudley: 38:31 And I think that's really good for the companies as well because building that culture it's, it can be hard work and it can be challenging. Hiring people who already care about this and already see the value and the vision and are already true believers. That's tremendously valuable. That's, that's great. That's going to save you a ton of time and you're going to get someone who appreciates this unique thing that you're offering to folks. And will be a great advocate, a great champion. So from that perspective, I think this is going to be helpful to get those job seekers involved and obviously the job seekers side as well. Now, you hit the nail on the head. We don't have job postings on there. So people, what they do is they would just click through to the company site. So we can see, okay, here's the fifty architecture firms in California you could work at, I'm just making those numbers up, but then you click on the actual companies they're on your radar now, but you'd have to actually find the job postings yourself. Maybe one day we'll be integrated into LinkedIn or something like that. So you just click a checkbox, but, we'll, that's probably, that's more of the future conversation where we're trying to go. That's, that's that's not something for today.

Bret Keisling: 39:33 Thomas, your plate is full and I'm not trying to cause trouble for anybody. [Laughter.] And you actually made it clear that there aren't job postings and it is an opportunity for those who want to do a little more research, and that's what it is. And I suspect that there are going to be other uses for the directory that you haven't necessarily thought of right now that will come to you. It's a huge undertaking.

Bret Keisling: 39:56 I will say that I was very enamored of the Shop EO. I first heard about it, Jennifer Briggs was on a podcast this fall, so I did a Mini-cast about Shop EO and I thought that was great, but I can't quibble with the evolution to this directory. So maybe at the holidays next year, you put up a little something, something for the consumer. But the directory is just a huge undertaking. It's very important. And I appreciate it and I'm sure many of us in EO do.

Thomas Dudley: 40:29 Well, I appreciate that, I appreciate you sharing that. I mean, it's great to know that people are using the things that we're building and that's awesome. And we can see the traffic on the directory as well. It's been definitely a popular thing as we've relaunched that. I think there are a lot of people who are using it and coming back to it kind of like that resource.

Thomas Dudley: 40:44 One thing you said that really struck me and has been one of the best things about doing this is the, just the number of great ideas that are coming through the members and through the community. So we have our evolution, our improvements, and the path we've taken has been heavily influenced by our members, suggesting things and saying, hey, we're having this problem. Can you help us with that? And so the content, for example, internally, the internal communications, the content. We build multiple new handouts a month as part of our content library. So we're always building new stuff and improving old content. And well over half of those ideas come directly from members saying, hey, we're trying to do this. Like I actually just, this morning was working on something about how you explain valuation as a very simple one pager to your employee owners, to help them understand what that looks like and how they can have an impact on the business. In a simple, clear way that makes sense to everyone. And that was a member suggestion. They were like, hey, we, we love the content. They've been a member for over a year, so they've done the basics. And now they're thinking about, okay, what's next? And they just suggested that to us. And then we can take on that work, produce that handout for them. Then we rolled that out as a template to the whole network.

Thomas Dudley: 41:56 So it's our function in many ways is to aggregate these ideas across the different companies, be the super content producer, and then do the customization to get that out in a way that it's very easy for people to leverage.

Thomas Dudley: 42:08 It's the same thing on the other side though. So the directory, we were enamored with Shop EO as well, and we thought this was like the absolute best way to do it. And then we launched it and then our members were like, hey, this is great but what if it were a full directory, right? What if we could use this for all these other purposes? And our members were right! They're often, I mean, they're always right. You know, they always, the ideas they suggest are always incredible. And so we look from the traffic and the directory is already much more popular than Shop EO.

Thomas Dudley: 42:34 So our members were clearly onto something. The community as well, we get all sorts of great ideas from the community. So our function, we see our function really as trying to figure out what these problems are that we can solve, focused on that visibility, focused on that reaching that very broad audience of people, consumers, job seekers, I mean, cities, state, governments, right? Kind of like that grassroots or main street approach. And so if we can solve a problem for the community or for the companies doing that, that's yeah, that's our role. That's what we think about ourselves being.

Bret Keisling: 43:06 Not sure if you just started it or if it just started in the last couple of months appearing in my email, but I love your "Drumbeat" where you highlight one of your member companies. That's just a really cool, simple, but, but way to spread the word about a company. So I love that.

Thomas Dudley: 43:22 Well, thank you. Yeah, that was from our [Senior] Director of Program Adrienne Gehan. She came up with that concept, just kind of a nice way to spotlight various members. So we're putting that out as our newsletter. If people go to our website and sign up at the bottom, they'll get that in their inbox. We also put them all on our blog as well. So we have a blog linked on our website so they can go back and see past content. But that's great. Yeah. Companies telling their stories. That's kind of the idea, is just getting, letting people know a little bit about our members and helping to get to know. That's really it, is just helping people see what's going on at other employee owned companies. Find them and get to know a little bit about them.

Bret Keisling: 44:03 Anything looking forward for Certified EO, or for you, that we can chat a little bit about? Where do you see the organization or even employee ownership going?

Thomas Dudley: 44:13 Yeah. I mean, I think this idea of employee ownership right now has never been more important. You hear people talk about the silver tsunami. You hear people talk about these big trends, like wealth concentration, or kind of the outsourcing, loss of manufacturing capacity in America. A lot of those big motivations for employee ownership, they've been going on for awhile. But all of that, I feel like has been heightened by COVID-19, the economic slowdown associated with that. And then also the lockdown and just the economic interruption kind of in response to COVID let's say. And so now, with things being where they are, I mean, obviously we're, as we're talking about this, we're right in the middle of this. I'm in Oakland, California, my wife and I have been sheltering at home for like 10 months or something, right?

Bret Keisling: 45:03 Forever.

Thomas Dudley: 45:04 We've been, we've been at home for a long time, but so I don't want to jump the gun on this, but I do think that there are at least some people starting to think about like, okay, what happens when we go back? Right? And are we going to build back to a status quo that had had issues and problems, or is this an opportunity to do something different, right? And to build something different. And so I think our community and our model and our idea here, it's a fantastic idea. I mean, I'm dedicating my entire career to try to make this something bigger and this is really what I see as my life's work. But at the end of the day, like, this opportunity, this timing has never been, we've never been more, more ready to basically scale and grow.

Thomas Dudley: 45:42 And I believe that our idea of employee owned business, this could easily be 10 times bigger. I mean, no problem, right? We're half of a percent of business today. We could easily be 5% of all companies. That's, there's no problem. We have all the tools, all the, all the laws, all the economic structures and the players in the space to set up and do all those deals and really grow. And so what's holding us back. I think it's, we need to get out there. We need to be on the radar. We need to be kind of the option, right. We need to do, I think there's a lot of work at the state and local level in terms of policy. And there's a lot of great people doing things there, but there's a lot of opportunities for growth there. I mean, federally, obviously there's a ton that could happen as well. We do have some great stuff federally though. So we just like, the ceiling is closer because we already have some really great things at the federal level.

Thomas Dudley: 46:28 So there's all sorts of opportunities about how exactly to grow. And there are different people with different approaches and perspectives, but I think the timing has never been more important. And so with us, Certified Employee Owned, we're newer and we're taking a little bit of a different track. Our focus this year is definitely around the visibility and just putting some of those basic tools in place. So we launched this directory. We started working on that directory, or what became the directory, shortly after COVID, the shut down. That's no accident there. It's not just because we had some extra time to focus on this. It's also because we felt like, well, hey, when this, when we come back from this, there's, there's going to be an interest in this idea. There's going to be a very strong interest in building strong local economies. Businesses that are more resilient. We saw from the Employee Ownership Foundation research, how employee owned companies were much less likely to cut jobs in response to COVID.

Thomas Dudley: 47:15 So this idea, I think that the interest in this is going to grow a lot over the next year or two. Our plan is getting that on the radar, but also just creating that infrastructure so that other people who want to get it on the radar can use our resources, our tools to help promote this visibility.

Thomas Dudley: 47:30 You can tell people, there are this many companies and, you know, Wawa and Taylor Guitars are employee owned. But if you show them a directory of all the businesses in their state, you're not even going to know which companies resonate with them. They might have a friend working at one of these engineering firms that you didn't even know about, right? And so we're trying to create those tools so you don't, you don't just have to tell people about the power of this idea. You can show them in a very visual way.

Bret Keisling: 47:52 I did a podcast a couple of weeks ago about Taylor Guitars conversion to 100% ESOP. And you just mentioned that there are a lot of ideas throwing around. I would love in a year or two when they get it under their belt a little bit for them to have an annual meeting and bring in a couple of A-listers. Some of their music clients, for two fold, it would probably be the coolest annual statement meeting ever, perhaps! But the other thing that I think would be very helpful is that we don't have any influencers. We don't have any celebrities. We don't have anybody who's advocating for employee ownership. And so many musicians, artists, sports figures, et cetera, have causes. So I love all the work that you're doing to kind of bring it on the bigger radar. But if Taylor Guitars is listening seriously, a couple of really famous people to be talking about employee ownership would help us all!

Thomas Dudley: 48:51 [Laughter.] Well, I think it's going to happen through the companies, right? In terms of that national recognition, in terms of getting this out there, it's going to happen through the companies. And I think that the, I mean, obviously I'm a part of the certification model, right? I mean, that's -- yeah. But one of the reasons early on we thought this was a good idea is, I don't know if everyone, but a lot of people know about the Fair Trade concept, right? And that really got on the radar. But when you think about how much reach that has, I heard about it through coffee, and I think most people heard about it through coffee. And so they through one segment in the grocery store have put this idea of Fair Trade out there. And I'm sure people have varying understandings of what exactly this is and I don't know if I wrote down what I thought Fair Trade actually means, like in terms of the standards and everything, I'd probably be way off, but I know about it.

Thomas Dudley: 49:35 I know it's a concept. I know it's out there. I have a general sense of what it is. And I got that through coffee and I think they got out there, this national reach, just through this one segment in the grocery store, right? But it was coordinated. It was all of these different brands using the same mark and putting the same general, like Fair Trade concept out there.

Thomas Dudley: 49:51 When you think about our space, we have 6,000, maybe 7,000 companies, $300 billion in revenue. And we're all over the place. We have not just the coffee company, but the grocery store and a bunch of other products in the store. And we got the company that built the grocery store, right? The construction firm. We got people driving the trucks, getting the products to the grocery stores. Like we have every industry, every state, big companies, small companies all over the place.

Thomas Dudley: 50:17 And so when you start thinking about the power of combining the reach of all those different companies, given what Fair Trade did in coffee? It's very clear to me that what's going to happen is if we're going to get this on the radar, the way to do that is through the companies and through their reach. I mean, it's very, I think that's very clear to me. And so at the same time, what we've learned from Fair Trade is that it needs to be coordinated. If everyone just says their own thing in their own way, that's actually, what's been happening for the past 40 years. Like we're not going to get that national recognition, that drumbeat, that national recognition that way. And so it does need to be a coordinated effort.

Thomas Dudley: 50:46 And we started that. We have that going. We have, like I mentioned, in the mark on WinCo Foods trucks, the PFSbrands trucks, and in Modern Times beers, and a ton of websites and all sorts of internal gear and all that.

Thomas Dudley: 50:57 So it's getting to the point where we'll talk to prospective members sometimes, and they'll say, hey, I wanted to talk to you because I saw your mark on the WinCo bags or whatever. So we're starting to get there the early signs of that. But I think you're right. I mean, it's going to happen through the companies. If we really are going to get everyone to know about this.

Bret Keisling: 51:12 Thomas, I really appreciate your time today and recording this podcast. I, like many people in employee ownership, support and celebrate all of the EO orgs. There are so many folks doing important work, and we need everybody to survive, but you have created a niche for an organization you're doing exciting and important things. If a business is listening to this and they're qualified for Certified EO, I can't recommend highly enough that they join, not just to get your resources, which would be enough, but to support everything.

Bret Keisling: 51:53 So I can't wait to follow what Certified EO is doing and you're welcome anytime on the podcast. And anytime you've got something important you want to talk about, I'd love to share it with the listeners.

Thomas Dudley: 52:04 Thanks, Bret. I really appreciate what you're doing with the podcast, too. I've been listening to the old episodes and just love the, yeah, I love it. I'm going to be a regular listener. I just love, we need things like this in the community. So I'm really happy to be here to support it. And I'm definitely going to come back when we have some new, interesting stuff to talk about.

Bret Keisling: 52:19 That's very kind of you, Thomas, have a great day.

Thomas Dudley: 52:23 All right. Thanks, Bret. Take care.


Bret Keisling: 52:26 Certified EO is doing really cool and important stuff, and I highly recommend you belong to it or otherwise supporting this great organization. I really appreciate Thomas Dudley for coming on the podcast. And I really do look forward to having him come back.

Bret Keisling: 52:40 Meanwhile, I hope you'll be like Thomas and check out past episodes of the EO/ESOP Podcast and Mini-cast. We've got more than 260 episodes that you can find at or wherever you get your podcasts. If you like what we're doing and want to support our work, we really would appreciate it. If you'd subscribe and like our episodes and share our posts on social media.

Bret Keisling: 53:06 Our country's going through a lot together right now, and we are going to get through it, together. And that's in the best spirit of employee ownership. Thank you so much for listening. This is Bret Keisling; be well.

Bitsy McCann: 53:24 We'd love to hear from you! To contact us, find us on Facebook at KEISOP, LLC and on Twitter @ESOPPodcast. To reach Bret, with one "T", email, on LinkedIn at Bret Keisling, and most actively on Twitter at @EO_Bret. Again, that's one "T". This podcast has been produced by The KEISOP Group, technical assistance provided by Third Circle, Inc. and BitsyPlus Design. Original music composed by Max Keisling, archival podcast material edited and produced by Brian Keisling, and I'm Bitsy McCann.

Standard Disclaimer: The views expressed herein are my own and don't represent those of my own firms or the organizations to which I belong. Nothing in the podcast should be construed as guidance or advice of any kind in any field and the fact that I mentioned an organizational website or an advocate or a company on a podcast does not reflect an endorsement, but if you've heard your name or your group's name mentioned on this podcast, I'd love to have you come on and talk about it yourself.

A note on the transcript: This transcript was produced by Temi, an automated transcription service. While it has been reviewed by The ESOP Podcast, we can not guarantee the accuracy of the transcription. Please refer to the original audio when citing sources.


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