Episode 156 Transcript
Bitsy McCann: [00:00:00] Welcome to The EO Podcast, where we amplify and celebrate all forms of employee ownership.
Bret Keisling: [00:00:12] 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. This week, I bring you part two of my long- form conversation with Marjorie Kelly of The Democracy Collaborative. Marjorie is a senior fellow and executive vice president and co-founder of The Democracy Collaborative, which works tirelessly to promote a more inclusive and equitable economy for all.
We brought you the first part of the conversation last week on Episode 155. A couple of months ago, on Episode 146 of the podcast, we featured Marjorie and Jon Shell of Social Capital Partners who talked about the amazing financing that was arranged for Taylor Guitars' transition to 100% ESOP. You can find those episodes, as well as all of our more than 300 episodes, in our archives at www.EsOpPodcast.com or wherever you get your podcasts.
In order to have context and continuity in this episode, we're going to start with the final question and answer from Episode 155. So if the first three minutes or so of this conversation sounds familiar, then thank you. That means you're a regular listener and I really appreciate it!
With that, enjoy part two.
Bret Keisling: [00:01:36] So my question in terms of all of the challenges and are they growing not fast enough, that sort of thing. And we all know certain tidbits that we hear all the time, for example, the number of Baby Boomers who have their businesses and it's all legitimate. But, do we not quite have the right message or are we not giving the message to the right people? In terms of the traction, do we need to change our message or just expand it?
Marjorie Kelly: [00:01:58] I think both. I think we need to tell a bigger story and I think we need to not be afraid to talk about creating more prosperity for more people and including people of color in that prosperity. And we need to not be afraid of policy. And so, I think that building a democratic economy is a matter of concern to both right and left. We all live in our economy. It's not this big divide in politics that we have right now. We need to find common ground. We know that wealth inequality is it staggering levels, Bret. And if we proceed to -- billionaires have seen their wealth grow by tens of billions of dollars since COVID began. And people of color and low income people there's more need for food banks and food stamps than ever before. So we're seeing this huge bifurcation of our economy, where some people are just thriving, just have obscene, let's use that word, obscene levels of wealth. And some people cannot feed their children. We have children going to bed hungry in America right now. And that is, if we don't care about that, what are we doing? Should we continue to behave? This is the 1970s and when Kelso invented it, and we're going to keep doing what we've been doing for the last three decades and keep getting the same outcome we've gotten, which is stagnation.
And we have our hands, Bret, on something that is brilliant. That is workable. That is hidden for strange reasons. And that ought to be the future of our country and our economy. And it will benefit a lot of people. Let's not be afraid to tell that story. Let's try our wings, that it's okay to care about people who are left out.
I think that business owners hear that. I think people in ESOP community know, the business owners, they care about their employees. They want them to thrive. There are so many business owners who will sell to the highest bidder because that's the norm in our, in that's means you're a winner and that's what you're supposed to do. There's so much pressure for that. And then five years later, they see their company sold again and again. And they see the social values that they cared about driven out. They see employees not being treated well or maybe laid off or production has moved overseas. There are a lot of business owners who really regret selling in the way that they did.
And so I think that we have these values as an ESOP community and let's not be afraid to talk about them.
Bret Keisling: [00:04:37] I just want to share an anecdote and it's speaks to what you said. One of the transactions I did as an ESOP trustee was a manufacturing company in the Midwest, in a steel town that had seen its best days 40 years ago. This was a very specialized company and we went and we did the transaction. Generally at the transaction, or when you announce the transaction, I shouldn't say the closing, but when you announce to the employees... confusion, but a lot of excitement.
But meanwhile, you have the reality of someone who spent his or her life building the company and is now selling it. So we do a meeting and I'm on a tour of the facility and there were two family members who were the owners and I'm with one of them out back in the parking lot and he was moved. He was in an emotional state at closing. So I said, this seems to have great meaning to you. And he and his brother did not wring every last dime out of the transaction, but they made millions.
But what he said was, "Bret, we have 120 employees. We had four different offers. This plant would have been shut down, the jobs would have moved, and our town could not afford another hit."
And I'm actually a little emotional as I'm telling you this story, because at a point where anybody would just say, write me the check, I'm going to go play golf. And by the way, they've earned it, whatever. But he was a guy who felt the weight, not just of his employees but of his town, and only a couple of thousand people in the town. So the power of the transformation. And I guess what I thought as you spoke Marjorie is part of the problem that we make is we get right to "how much money will I get." And we're almost overcoming the objection of less dollars, whereas and it's because of what you said that it's making me think of it. I'm not a trustee anymore, but if I were, it would be in the context of, let's not talk about money. Yet. We'll talk about money, but it's all of the different things that you've just mentioned. That's going to be the traction perhaps.
Marjorie Kelly: [00:06:42] Yeah, I think you're right. I think our challenge and I think our invitation and our opportunity is to make other things mentionable. We need to help each other. Let me put it this way. I think there is, it's almost sometimes a kind of a guy thing in our society and our economy that you're going to make every dime. It's you're a sissy if you don't. It's like you're a sissy if you cry. We've moved beyond a lot of that, Bret.
I have five brothers and every single one of them is a fantastic father. And I don't, I think, back in the fifties, there were a lot of men who were thought it was sissy to change a diaper or to babysit your kids or even cook a dinner. We've moved beyond that. Men are great cooks, men are great fathers. What we've seen is that's actually a game, right? These are happier men. They know their emotions more. They love their families. They're more whole human beings.
So it's not like when you set aside these archaic, outmoded values that you're losing something. It might seem that way, but we're not, right? We're not losing something if we say I care about my community. I don't want to wring out an extra dime and then look and see my community devastated, my employees laid off, the plant that I built closed. Really? Is that really a win? No.
Aren't you, yourself diminished. Maybe you got a few more bucks in your bank account, but aren't you yourself diminished by seeing this destruction, that those extra dimes wrought? It's a game, right? There are so many employee owners who have sold to employees who are so happy, and they're happy that their employees are thriving, their communities are thriving . But these are living companies. We're not just turning them into objects that are just sold again and again.
So, I think that we need to make these things mentionable and to help each other claim that these things matter and that it's okay. It's okay to care about these things.
Bret Keisling: [00:08:37] I love where you talk about how we've evolved as a society and what popped in my mind and I apologize, cause it's not EO. I'm one of seven children and we were all born in the fifties and sixties. I'm the father of two children; one of seven father of two. The day my older son was born. I changed his diaper.
Marjorie Kelly: [00:08:57] Oh, good for you.
Bret Keisling: [00:08:59] I changed more diapers than my father in his entire life with seven children had ever changed and that's not me begrudging my dad. That wasn't the dad's role.
Marjorie Kelly: [00:09:10] That's right.
Bret Keisling: [00:09:10] First of all, I'm better off for having changed the diaper. But second of all, and she's now my ex-wife, she was not raised in a society where her husband wasn't going to help. So it is that evolution and I realize I just told the personal diaper story, but it really ties into let's get through...
And by the way, Marjorie, it also ties in with what we were talking earlier about people of color and women's roles. Let's get out of the mindset that societally we have been in for decades or centuries and just adopt the new reality and decide how to make it better for everybody.
Marjorie Kelly: [00:09:43] I love that story, Bret, that gave me goosebumps when you told me that, and that you're so proud of that. And that was a really intimate moment with your, as a father. Yeah, that's a game, that's a game. And and so yeah, what your father was afraid of. It was a whole culture telling him, don't do this. And so, it's very similar today. We think it's not my role as a business owner to think about benefit to the community or benefit to employees. It is, actually. People and in their heart, I think, I think the most awake and alive and highly evolved business owners do care.
And that's who, that's what the community of employee owned companies is about, is those people and telling their stories. I love hearing the stories of, it is mostly men, it's not all men, but telling the stories of how their employees benefit.
We wrote a story in Employee Ownership News about Galfab, which was heavy equipment manufacturer in rural Indiana. And the owner there transitioned to employee ownership because he didn't want to see his little rural community lose this important manufacturer, which it would have if it had been sold to an absentee owner. And he was so proud and he said, I've always cared about my employees. I think that's a kind of a diaper moment. I t's yes, it's okay to care about these things. You're a wonderful person that you care about these things.
Bret Keisling: [00:11:05] I love that. Although I need to say, I am thrilled that I've come up and populated the [EO] A-ha Moment. I don't think I'm going to be asking you if anybody's had an EO "Diaper Moment."
Marjorie Kelly: [00:11:15] [Laughter.] I'm not sure that metaphor works, but...
Bret Keisling: [00:11:20] As a matter of fact, that could actually be a very horrible, I love that.
Marjorie, this has been so wonderful for me and to be honest with you, we have covered some things that a lot of folks, because of uncomfort or discomfort have said, "Bret, I don't want to talk about that on the podcast." And I really appreciate it. I do want to be mindful of your time, particularly because if I'm super polite and respectful, hopefully you'll come back.
But tell me now a little bit in the context of your work. What can I do? And I don't mean as host of the podcast, but what can I, and everybody in employee ownership, if we want to support Democracy Collaborative, if we want to support Fifty by Fifty, if we want to support all of the efforts and employee ownership that you're promoting, what can we do to help you?
Marjorie Kelly: [00:12:08] Yeah, that's great. Our Employee Ownership News is free. So people can go to our website at DemocracyCollaborative.org, and sign up for Employee Ownership News. We'd love to, we'd love to share that with people. And I would love to see people go and take a look at our Opportunity Knocking report, and you'll find that at fiftybyfifty.org and that's where you can sign up as well.
Because it's talking about these dozen funds that are emerging to spread employee ownership. And if people are qualified investors or involved with institutions that are, I think they ought to look at investing in these because these need early stage investors, what are called catalytic capital, to prove the case that employee ownership is a good investment. So I think that's another thing people can do. If they're interested in other other ideas, reach out to me personally. It's firstname.lastname@example.org is my email and I'd love to hear from people. We're always looking to spread employee ownership and build community wealth and we're looking for partnerships in doing so.
Bret Keisling: [00:13:15] Marjorie, if I can, a little bit of podcast housekeeping for our listeners. We're going to have a link to Opportunity Knocking on our website on our show website, we'll include your email address since you've given it out loud, we'll make sure that our listeners if they visit the show website are able to contact you and follow up.
So Marjorie by way of bringing this to a close, and I appreciate all your time, this has been delightful and to be honest for anybody who's interested in promoting employee ownership, what you are saying is important. So thank you for saying it here.
We have been collecting EO A-ha Moments, and I understand in your career, you've probably had a couple of them, but you've told me that there's one that's actually connected to Taylor Guitars, which is a really cool story. Can you share your A-ha Moment with us?
Marjorie Kelly: [00:14:00] Yeah, Bret, we did it in Employee Ownership News, we heard about Taylor Guitars converting to an ESOP, and we ran a story about that. The A-ha Moment for me was when I saw this was a pension fund that called this a low risk investment. I just, I absolutely loved that. Because this is a multi-billion dollar pension fund, which cannot do below market investments and it cannot do small investments. And it looked at this and said, oh that's a low risk investment. We're happy to make that. And I thought that really proves the case that these are serious businesses. They work at scale. There is a good deal for investors here. And this is a missing, this is a missing opportunity for most of the market. And so that was a wonderful moment.
Bret Keisling: [00:14:48] You gave me the A-ha Moment by sharing it, because one of the reasons why I've been told as a trustee that private equity was more expensive, not just they want to drive profits, but because ESOPs were riskier. And now to have somebody come in and say, no, it's a low risk investment. We now have data to say to the other folks, your analysis may be incorrect.
Marjorie Kelly: [00:15:13] Yeah, that's right. This is a very sophisticated pension fund of multi-billion dollars and here's what they said.
Bret Keisling: [00:15:21] Marjorie Kelly of the Democracy Collaborative. Thank you for what you're doing there. Thank you for Fifty by Fifty and giving me a siren to follow with the 50 million. You and your colleagues are doing so much to promote employee ownership and others stuff as well. But just thank you for your time, thank you for your advocacy, and thank you for your leadership. It means so much to me and so many others.
Marjorie Kelly: [00:15:45] Bret, thank you for having me. And I want to say the same to you. Thank you for this podcast. It's, you're doing a real service here and it's really a treat to be part of it.
Bret Keisling: [00:15:53] That is very kind of you and I am mindful and humble, very, very sincerely that all I'm doing is talking to really cool people like yourself. Marjorie, thank you and I hope we'll be able to have you on again.
Marjorie Kelly: [00:16:06] Thanks, Bret.
Bret Keisling: [00:16:08] I'm grateful to Marjorie Kelly for joining me on the podcast and for Karen Kahn of Employee Ownership News, who facilitated Marjorie's appearances. Just as Marjorie said she'd love to hear from you and your opinions, I would as well. We've covered an awful lot of very important topics in Episode 155 and today, and please, if you have any thoughts, reach out on social media or directly. You'll find out how in just a moment.
Thank you so much for listening. This is Bret Keisling; be well.
Bitsy McCann: [00:16:42] 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 Bret@KEISOP.com, 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.
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 Descript, 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.