Employee Ownership is a journey
It’s easy to brand business leaders as power hungry dictators to be overthrown with pitch forks and picket lines. I am a power hungry dictator but my power doesn’t come from the pursuit of money and a culture of fear. It comes from the pursuit of dreams and a culture of love. As a result my ivory tower is bomb proof. And it fucking needs to be. We haven’t got time to dick around voting over which colour toilet paper to buy. There is important work to be done. (Strokes white cat from mountain hideaway while tackling the worlds water problems).
In a recent panel discussion at the world changing Meaning Conference i argued that there are many things that give a sense of ownership and empowerment to employees. In the case of Propellernet there are many more important things than a legal employee ownership structure.
Let me take you on our journey with employee ownership.
Formation
From day one Propellernet has been an employee owned company. We’ve never taken any external funding and 100% of share ownership has always been in the hands of the people working in the company. This started with the 2 founding employees, Jim Jensen and Jack Hubbard (me).
I’d had enough of crap corporate cultures so I approached Jim in December 2002 and asked him if he wanted to join me in starting a company. This was of course a highly reckless career decision but Jim agreed and Propellernet was born with 2 shares, one for Jim and one for me.
It wasn’t so much a company as a lost cause. We had no office, no employees, no clients and no money in the bank. We’d given up promising careers and didn’t know what our company was going to sell.
I was working 9am to 5pm trying to magic a company out of thin air and 6pm to midnight chopping onions in a tex-mex restaurant to pay the rent. Jim was digging swimming pools.
We cobbled together a sales presentation, blagged a couple of clients and moved out of Jims broom cupboard and into an office with wood chip and damp patches. We never invited clients there.
Early Days
Finding anyone to work for our company was hard and employees were of a low grade. We had no employment contracts, personal development plans or appraisals. We were called jokers in sales meetings and taken to court by clients. We were not seen as a great place to work.
We put in the hard yards, built everything from the ground up and got the rocket off the ground, boosters misfiring, rivets popping and panels flapping.
Boom Talk
We were in the internet services boom and all industry talk was about growth and exit. Who’d been acquired? How long was the earn out? What was the multiple? Employee Management Incentives (EMI) were en vogue. EMI is a tax efficient way for small companies with limited resources to attract top talent to help them grow, sell and exit.
Search was white hot. We were going to get a multiple of 20 X profit and retire with the slight caveat that we weren’t making profit. This was a real problem because the window of opportunity was finite. Looking back it seems like madness but this was the zeitgeist in what was now 2006.
Early Believers
A handful of angels showed up and took our lost cause to heart. Rachel won over clients, James brought order to chaos, Gary put us in the game and Stella helped him changed the game.
With boom talk bravado we offered them EMI share options as a way to motivate them for the journey ahead. They owned something that was worthless and we would have to work hard to grow the company before we could sell and realise any financial value.
It was good to be 6 on this journey instead of 2.
Winds of Change
Just as we were finding our groove a number of things happened that turned our world upside down.
- Social media mania struck. Search was dead and the boom talk was all Social. The consultants advised we ditch search and become a social agency. Social was white hot but we were still using Google and our clients seemed to think it was still important. So while everyone else slipped into the emperors new clothes, we kept our faith in search.
- The country went into recession. The dotcom bubble burst along with it any hopes of selling the company we were growing to love. Everyone was tightening the purse strings and battening down the hatches to survive the economic storm. We worked like crazy creating data backed stories to convince our clients that they should continue to invest in search.
- I lost my brother Luke in January 2007 to drink, drugs and depression. I began looking after myself and caring for the wellbeing of my employees. This was the beginning of a journey towards being a company whose reason for being was to make life better for its people.
- We couldn’t hide from the recession under damp wood chip so we took the gamble of moving the company into shiny new offices in the heart of Brighton. We spent everything we had making the offices look and feel great. Shit or bust, we rolled the dice. Double six.
Driven by necessity and high on shiny office vibes we won a roster of great clients and got busy. We were pushed to the limits of our abilities and needed a stronger management team to cope with burgeoning operation.
Professional Management
We needed a new business director, a managing director, a client services director and a finance director. We had to use everything in the locker to attract the best people and share options were obvious bait for the bargain. We gave our word that if it worked out the company would award them share options. They took the bait and we remained true to our word.
The impact was immediate and we grew quickly but this time it was sustainable. Stef won clients, Ed looked after them, Simon put proper agency financial systems in place and Nikki went to work organising everything and everyone. Eternal growing pains gave way to operational bliss and it felt good.
Sell Out
With the management team delivering steady profitable growth, Jim and I had one job left to do. Sell Propellernet to the highest bidder.
When you sell your business you have to decide if the cause you got your people to believe in and dedicate 10 years of their life towards was just a ruse to make you rich or whether it meant something more.
You also have to decide if you want to play bitch to a grey suited corporate mood hoover for a 5 year earn out period after which if you hit your number you can fulfil your dream and go live in the mountains while your people, purpose and culture all go to hell.
Fun, adventure, wellbeing, creativity and innovation go out of the window along with ski trips, music festivals, wellbeing funds and dream machines. But hang on…..
No but’s.… and enough with the hippie shit. Get in the blocking chain, cover your arse and hit your number.
Er……no thanks.
Legacy Fudge
The whole point of share options is for employees to realise financial value when we sell the company. If we don’t sell, they have no value.
We decided to pay a divided on the options as if they were shares, but without the tax advantages that come with equity. It was a fudge but it was important to us that this scheme maintained its value now we had changed our minds about selling the company. After all, these people had taken career risks and believed in Propellernet when there was little reason to do so. Besides, I was already dreaming up better ways of rewarding them.
Board of Shareholders
Our star players Gary Preston and Nikki Gatenby were appointed to the board and the company paid a one off bonus to convert their options into shares. We felt this was fair recognition for their contribution and an assurance of their continued commitment. Our Finance Director Simon Collard bought shares with his own money and we now had a very strong board of shareholders with complimentary skills.
This brings us up to the current incarnation of Propellernet as our employees come to recognise it in 2015.
Life is Good Today
We are a great place to work now and although we don’t need promises of a better tomorrow to attract great employees, I still spend all of my time designing a better tomorrow for them.
The company has a history of rewarding people for their contribution. We have always operated in this way and will continue to do so although the EMI scheme as it stands is no longer the best way to do it.
Suppressing Growth
The financial value of owning a share or a share option goes up when the company grows. This is why PLC’s are obsessed with growth. But we intentionally throttle growth by placing an upper limit of 60 employees. We do this for 3 reasons.
1. With too many people you lose the family feel. Policies and management structures replace common sense and conversations. It might look good on a spreadsheet but it makes life worse for employees.
2. If you double revenue and headcount, the revenue per employee stays the same. If revenue increases without adding more people then the finanical resources to make life better for every employee goes up.
3. If we cant add more people we are forced to reinvent the way we create and realise value. This forces product innovation from within a service culture.
Staff Turnover
Good people don’t stay in jobs forever, they need to take on new challenges. But it’s a shame to lose good people so instead we invest in their dreams.
We kick of projects that move them in the direction of their dreams and apply entrepreneurial creativity to turn these projects into business and lifestyle value. Propellernet is a spring board to enable our people to live the lives of their dreams.
Of course none of this is possible if the agency doesn’t perform but why wouldn’t the agency perform when the employees know reason the agency exists is to invest in their dreams. They are empowered to follow their dreams through their work.
Dream Incubator
The first floor in our offices is now a dedicated dream incubator. We encourage employees along with their friends and family to follow their dreams. We provide support, advice, office space, contacts and investment if required. We will do everything in our power to make their dreams a reality.
Dream Valley
I live on the side of a mountain in a beautiful valley the french alps. I call it Dream Valley, a place where dreamers, entreprenuers and change-makers from all over the world come to meet, play and dream up a better future.
The wild landscapes, fresh air and exercise keep my body strong and my mind clear which helps me stay connected to the unfolding vision I have for the future of Propellernet.
In the last year we have hosted 10 projects and seen over 400 people visit and take inspiration from Dream Valley. I am living my dream and helping other people follow theirs.
Dream Projects
Working full time trying to bring the dreams of my people into reality i’ve begun to understand the unique magic and business value of dreams.
- Dreams are a vision for a better life and as such are packed full of authentic value. Business innovation driven by dreams gets way beyond latest trends and money making schemes.
- We learn by doing and dream projects are a vehicle to do all kinds stuff you’d never get to do otherwise. This makes people robust and resilient.
- Dream projects act as a powerful magnet that bring likeminded people into your network. People attracted by dreams are in it for the right reasons so relationships are strong and collaborative.
- Dreams projects have both vision and intention which means they manifest easily. The universe seems to want dreams to come true.
Here is a short story of 7 dreams.
1. Coverage Book
Gary and Dan were 2 of our best consultants. everyone would go to them for help but that meant others were not getting the opportunity to prove themselves. Dan wanted to make stuff and Gary wanted a technology business so we backed their startup with 50% of our profits.
They had risen to every other challenge so we believed in them. After 6 months of testing and learning they struck on something and Coverage Book was born. 2 years later and we now have 300 paying customers in and £300,000 in annual sales.
2. American Dream
Stella came to us from the PR industry and helped us transcend the obsolete technical SEO (Search Engine Optimisation) business model. She then had a burning desire to take what she had learned back to her old friends in the PR industry and help them transcend their obsolete offline model.
We teamed her up with Gary and Dan so that our investment in her thought leadership efforts would pay back in product sales. She wrote a book, hosted events and quickly became a leading voice for positive change in the PR industry globally.
Stella dreamed of travelling around America but couldn’t see how she could afford it or take the time off work. We suggested she take her laptop and work nomadically while she traveled around America meeting her new mover and shaker friends in high places, having the time of her life and growth hacking product sales. She is designing her dream trip and leaves early next year.
3. Jake Sniper and the Coverts
Mark needed a platform to test his media tecnology ideas before taking them to clients.
Some years ago his band came close but didn’t quite make it, so they gave up on their dream and got proper jobs. Since then he’s secretly been collecting characters, stories and worlds in his imagination.
We did a rap show at Propellernets 10 year party and he let this information slip so I asked him to write it down and 10,000 words later Jake Sniper and the Coverts was a thing.
He called the band back together with some new members (including 5 Propellernet employees and 3 of their family members) and we began jamming around his multi-media future sci-fi conceopt..
We wanted to headline a music festival, but none of them would agree to it so we created and headlined our own music festival www.slope-off.com.
We recruited a writer and film maker to help us to produce a 10 part mini series, a live show which we are taking to the Edinburgh festival, a sound track concept album and a feature film. We just got back from 3 days in Dream Valley making music and bringing stories to life.
4. Happy Drinks
Rik is an ambitious and confident all rounder who understand technology and creative. Clients love him, he has a firm grasp of figures and a burning desire to do something purposeful in the world. All in all a great blend for the modern day entrepreneur.
He has an idea for a new drink which contains a natural supplement that boosts serotonin and makes you happy. Instead of talking it up in the pub, he bought some fresh fruit, whizzed up a few smoothies and secured a pitch at a festival. If it takes off, we will invest in Rik and help him hydrate a nation of happy dreamers.
5. Wild Safari
Sophie uncovers insight, designs marketing ideas, loves to travel and has always dreamed of going on Safari. I met Roger (a private equity guy) who told me about Liz (a safari operator in Namibia) and I set up a skype call to get Sophie and Liz talking. Sophie helped Liz with marketing and Liz has designed the safari sabbatical of a lifetime for Sophie. I join them in Namibia next week where we’ll spend my 40th birthday looking to see how we can dream up some exciting future stories for this wild and wonderful collaboration.
6. The Happy Startup School
Lawrence and Carlos use to run a digital agency called Spook Studio but their passion was in purposeful startups so they kicked off a side project, The Happy Startup School. They put on a summer camp event and invited me to share my story. We co-created the Alptitude project in Dream Valley where hiked up a mountain and built a cairn which killed Spook Studio and bound us in a shared mission to get people following their dreams. We’ve created a monster. A lovely happy unstoppable monster hell bent on positive change.
7. Unknown Epic
Kim (the younger brother of Sci-Fi Mark) had a job in social media but it wasn’t his scene. Kim is a musician and free spirited adventurer who felt crushed every time he returned to normality after seeing such beauty and wonder on his travels. His best mate Jake was designing super yachts in Monaco and also felt the wanderlust. They concocted a dozen money making schemes which would help fund their adventures and I suggested they design their dream adventures let the business idea emerge from that. We launched Unknown Epic at our Slope Off festival with a sunrise service.
One year on and the boys have 7 adventure projects under their belt, a huge following, plans for a clothing line and the belief to make it all happen. And we my freinds have a concierge boutique adventure service to take us boldly where no marketing agency has been before.
There are dozens more dream stories like this unfolding and it overwhelms me to think about it. So I try not to, I just get on with it.
Connected Dreams
My brain is wired and operating in a completely new way. Constantly connecting people, ideas, dreams and opportunities and creating positive story lines around which the action can unfold.
I wanted to share what i had learned so i ran a workshop at this years happy startup summer camp. I explained the nature of dreams and led a short meditation exercise to help the group access what their true dreams were.
I got 4 people to share their dreams and we spent 30 minutes creating a future story which connected them. Then in groups of 4 everyone tried the exercise. The noise was deafening and an hour after the workshop there were still 3 groups working on their connected dream story. I was blown away.
Working alone on our own dreams is hard. It’s more powerful to pool resources, connect dreams and work for each other. Dreams take on a more powerful energy and realise much more quickly when connected. How could I take this to the next level?
Dream Accelerator
We hear a lot about startup accelerators these days. A startup accelerator is a program designed by investors to help new businesses accelerate their way towards making money.
With my new found understanding about the creative properties of dreams I wanted to run a dream accelerator taking the concept behind my 2 hour connected dream workshop and running it for 5 days.
In May 2016 10 employees from Propellernet will spend 5 days in Dream Valley living together and working together to realise each others dreams.
Future Gazing
Dream story manifestation beats a crystal ball so here’s whats going to happen.
- Propellernet will become a creative power house of 60 superheroes delivering marketing communication services for a handful of lucky clients.
- Dozens of dream projects will realise through the dream incubator, dream accelerator, dream valley and connected dreams philosophy bringing happiness and excitement into our lives.
- Clear and viable business models will emerge from our pool of dream projects, and new companies will be born to which Propellernet will become investor and advisor.
- Our empire of dreams will include include a creative agency, technology businesses, drinks brands, boutique adventure company, safari company, a food publisher, an sci-fi entertainment franchise and a number of purposeful initiatives aimed at solving social, economic and environmental problems.
- We will become adventurers, film makers, musicians, comedians and technologists.
- We will become masters of story telling and rewrite the way business should be done. We will write books and make films so others can benefit from this new way of doing business.
- We will have built a global network of influencers and collaborators across education, government, NGO’s, TV, Film, Music and technology.
- We will run an annual conference in Dream Valley connecting people who are dreaming big all over the world.
- We will be crowned the best company to work for in the world.
I hope our journey exploring employee ownership has made an interesting read. It’s certainly been a fun ride but i think the best is still to come.
Follow our adventures
Propellernet : Best place to work in the World
Coverage Book : PR reports to show off your hard earned media
Answer The Public : Ask the Seeker and he’ll suggest content ideas
Dream Valley : Alpine playground for dreamers and change makers
Happy Startup School : Learn the path from passion to profits
Alptitude : Where innovation meets utopia
Jake Sniper and the Coverts : Sci-fi music, film and live show
Wild Dog Safaris : Putting Namibia on the map
Unknown Epic : One moment, Forever
Dream on
