50% of your investors are people you already know | Gijsbert Koren speaks on steward-ownership
Gijsbert Koren is the founder of We Are Stewards and together with his team, they advise startups and established companies on how to transition to steward-ownership, a practice that encourages businesses to put their mission at the forefront. In this interview, Gijsbert speaks about the importance of steward-ownership and the common mistakes entrepreneurs make when crowdfunding.
In your own terms, how would you explain steward ownership to someone who is new to the concept?
Steward-ownership is a way of creating the foundation of ownership of a company. The core of steward-ownership is that a company is ‘self-owned’ and exists to serve its purpose. Steward-ownership is a way to safeguard a company’s purpose and there are two universal principles of steward-ownership:
- Self-governance: Controlling voting power is in the hands of stewards who are close to the company. Voting rights cannot be sold.
- Profit serves a purpose: Profits cannot be privatised. They are reinvested into the company or donated to serve the mission of the company. Investors, founders and other stakeholders are fairly compensated.
Examples of steward-owned companies are the messenger app, Signal; search engine, Ecosia and until recently, the outdoor brand, Patagonia.
A crowdfunding campaign is a marketing campaign in which you invite people to contribute. And it always starts with people you know ⏤ friends and family.
That’s very explanatory. Does this mean social enterprises can be profitable and still help people and the planet?
The short answer is of course yes. But I also want to challenge the question. I think we should redefine what profitable is, what is the so-called ‘bottom line’? If you were able to look from the moon towards the Earth, you would see that a lot of harmful activities are profitable and grow to do more harm. While being purely financial seems rational, the results can be extremely irrational. If we destroy our Earth by creating financial value in the short term, who are we fooling? I think we have to redesign the economy, to better serve the needs of current and future generations. In 2019, almost 4 years ago, the CEOs of some of the largest companies in the US stated that the age of shareholder primacy was over. It’s time to serve all stakeholders. If we really want to make this shift, we need to rethink what companies are for and who owns them: shareholders. What if companies were not owned by shareholders, but by themselves and were able to serve all stakeholders? That’s the core of steward-ownership and why it’s so powerful. Back to your question: Steward-owned companies are as profitable as their shareholder-owned counterparts. Profits can be shared with stakeholders and in most cases also generously donated to social projects and science.
This is eye-opening. Speaking on finances, in your opinion, what mistakes do entrepreneurs make when crowdfunding and how can they be avoided?
With crowdfunding, you invite friends, fans, clients and everyone in your community to contribute to starting or growing your initiative ⏤ be it a project or a company. Instead of one or a small number of professional investors, you raise money from a large group of potential ambassadors. The power of crowdfunding is that because of the large number of contributors, it’s more than money ⏤ you are creating or growing a movement or client base if you wish. The most common mistake entrepreneurs make is to pitch their idea on a crowdfunding platform and wait for investors to contribute as if there exists a so-called crowd of people who are waiting to chip in. In reality, crowdfunding is a highly social phenomenon. A crowdfunding campaign is a marketing campaign in which you invite people to contribute. And it always starts with people you know ⏤ friends and family.
Step two is to invite your network and existing clients to join and step three is to try and reach people in your target group that you don’t know yet. I think half of the crowdfunding campaigns have 0 or 1 investor because people still think that there is an anonymous crowd to tap into. That crowd just doesn’t exist. On average 50% of your investors are people you already know.
What inspired you to develop We Are Stewards and how can people support?
Around five years ago I bumped into the concept of steward-ownership and the idea that companies can ‘own themselves’. I used to support social enterprises with crowdfunding campaigns, to help them start and grow and make positive change. But along the way, I learned how important ownership of a company is if you want to be a social company in the long run. I hope I don’t sound too sceptical, but we can see all around us that most companies that are successful and are owned by shareholders and listed on the stock exchange, only exist to serve one purpose: the financial needs of shareholders. At the same time, most entrepreneurs start a company to make a change in the world. In some countries, this motivation is more important than the wish to become rich or earn a lot.
So, if that’s the case, we should reconsider which ownership model we use when starting a company. Companies like Patagonia, Rolex, Bosch and Zeiss were lucky enough to still be 100% founder-owned when their founder decided to transform the company into steward-ownership. At We Are Stewards we use half of our time to support companies to explore and implement steward-ownership. The other half of our time is used for field building to make steward-ownership known and more accessible. Our aim is to make steward-ownership an attractive and mainstream model to choose from. We are a foundation and are open to collaborations if you want to join us on our mission
Improving the economy and putting people and planet first are some of the themes at this year’s Social Enterprise World Forum (SEWF23). Come join Gijsbert and thousands of changemakers as we form new collaborations and share ideas on several ways to create better and more sustainable business practices in the Netherlands and across the world.