Ep 01 - Stewarding the Corporation (Gijsbert Koren) の全文書き起こし

together. 00:05:08.639 --> 00:05:11.600 We were not the only ones thinking of this idea. 00:05:11.600 --> 00:05:14.720 Well, there were people in other countries as well. 00:05:14.720 --> 00:05:23.680 Um but yeah, it was worthwhile working on this because it actually solved the problem at that time, access to finance for for SMEs. 00:05:24.079 --> 00:05:34.079 So I imagine that it's also at that time that you started appreciating a little bit that it matters what kind of company people are investing in. 00:05:34.079 --> 00:05:40.720 How does the interest in steward ownership actually connect to this experience about inaccessibility of traditional finance? 00:05:41.040 --> 00:05:41.279 Yeah. 00:05:41.279 --> 00:05:51.120 So if you ask people, if you ask humans whether they would like to invest, it becomes not an institutional decision, it becomes an emotional decision, maybe. 00:05:51.120 --> 00:05:55.360 It becomes an act of support and maybe even love. 00:05:55.360 --> 00:06:05.040 So with crowdfunding, you pass by the institutions, you go directly to the people using their savings to actually do or do not invest. 00:06:05.040 --> 00:06:08.160 So is the business worthwhile? 00:06:08.160 --> 00:06:11.759 Or is it better not to start or grow that business? 00:06:11.759 --> 00:06:16.399 So it's really important to be more human when looking at investing capital. 00:06:16.399 --> 00:06:29.680 I mean, in the end, we are all humans, so you can go the institutional route, but the danger of going the institutional route is that you follow procedures instead of your gut and what actually fits and what is actually fair. 00:06:30.160 --> 00:06:38.079 So I guess you already mentioned this sense of um anger with with some of these entrepreneurs. 00:06:38.079 --> 00:06:49.040 That that also made me think this is a podcast also about conceptions of the good life, and this life of an entrepreneur is of course a very specific choice, right? 00:06:49.040 --> 00:06:50.959 A very specific way of living. 00:06:50.959 --> 00:06:54.959 It's something people are are very proud of. 00:06:54.959 --> 00:06:57.920 It also comes with its own own challenges. 00:06:57.920 --> 00:07:05.199 Could you describe how you see that specific life choice and uh what comes with it? 00:07:05.519 --> 00:07:06.160 Yeah. 00:07:06.160 --> 00:07:08.959 For me, it was and is freedom. 00:07:08.959 --> 00:07:20.879 The freedom to decide uh what you spend your time on, to work on things systemically, because you can also change the rules of the game while playing the game. 00:07:20.879 --> 00:07:26.639 Instead of trying to fit in an existing system, fit in existing rules. 00:07:26.639 --> 00:07:29.519 I think I don't I was not built for that. 00:07:29.839 --> 00:07:30.879 No, why not? 00:07:31.120 --> 00:07:31.439 No. 00:07:31.439 --> 00:07:33.519 Um I don't know. 00:07:33.519 --> 00:07:34.720 I'm always looking. 00:07:34.720 --> 00:07:42.319 I I was trained as a designer and I'm always looking

at I'm always questioning why is something designed the way it is. 00:07:42.319 --> 00:07:49.120 Instead of trying to play within the boundaries that are set, I'm looking at the boundaries. 00:07:49.120 --> 00:07:53.439 And I don't know, as an entrepreneur, you get to decide the boundaries if you want to. 00:07:53.439 --> 00:07:55.120 So yeah. 00:07:55.360 --> 00:07:56.720 Okay, and so that's why 00:07:56.720 --> 00:08:00.800 and now you're suddenly in the EU legislative regime. 00:08:00.800 --> 00:08:03.199 Why is the 28th? 00:08:03.199 --> 00:08:06.879 What's 28th about it, and what's it supposed to do? 00:08:07.279 --> 00:08:10.240 So there are 27 member states in Europe. 00:08:10.240 --> 00:08:17.120 Well, one of the ideas or promises of Europe is that as an entrepreneur, you can work cross boundaries, right? 00:08:17.120 --> 00:08:19.680 You can operate in all these member states. 00:08:19.680 --> 00:08:22.399 So there's a single market, as they call it. 00:08:22.399 --> 00:08:30.560 But in practice, entrepreneurs experience a lot of barriers when trying to access this so-called single market. 00:08:30.560 --> 00:08:42.399 So the idea is what if there's an imaginary 28 country where you can also register your company and make sure that this company can operate uh in all the 27 member states, right? 00:08:42.399 --> 00:08:45.120 So that's the idea of the 28 regime, or the promise, let's say. 00:08:45.519 --> 00:08:46.559 Sort of a super ego. 00:08:46.799 --> 00:08:47.840 Yeah, yeah. 00:08:50.480 --> 00:08:59.279 So this 28 legal regime is supposed to provide a sort of uh legal form, a sort of a company form. 00:08:59.279 --> 00:08:59.840 Yeah. 00:08:59.840 --> 00:09:10.240 Uh and it would be made easier for people to operate across the EU member states by actually having a name or you know, this extension uh that is recognizable. 00:09:10.240 --> 00:09:12.799 It will be easier to register online. 00:09:12.799 --> 00:09:15.440 And so, what is the underlying logic behind it? 00:09:15.440 --> 00:09:16.960 So, what is that they want to achieve? 00:09:16.960 --> 00:09:22.480 Why is this important for competitiveness and for the Commission's understanding of competitiveness? 00:09:22.879 --> 00:09:30.399 Yeah, what I think is important is that if we need or want to compete with the US or China, those are single markets. 00:09:30.399 --> 00:09:34.240 And if Europe is not, we are lagging behind because of our own rules, right? 00:09:34.240 --> 00:09:36.480 So that is, I guess, quite dumb. 00:09:36.480 --> 00:09:43.600 So we're kind of taking away barriers that we created ourselves, because of course we are also separate countries. 00:09:43.600 --> 00:09:56.720 So, but we we are now finally, I hope so at least, creating an actual market where European companies can thrive and get stronger, be more innovative, and in the end make Europe more competitive. 00:09:57.440 --> 00:10:01.679 And what can steward ownership contribute to that vision? 00:10:02.000 --> 00:10:02.240 Yeah. 00:10:02.240 --> 00:10:08.480 So now the dominant view when you look at a company is that a shareholder is the most important stakeholder, right? 00:10:08.480 --> 00:10:14.639 So a company is designed aroundly around this dominant shareholder. 00:10:14.639 --> 00:10:25.840 At first, it's the entrepreneur, the one starting the company, and if that entrepreneur needs capital, investors step in and become also shareholders or co-owners of the company. 00:10:25.840 --> 00:10:28.480 But it's not, of course, the only stakeholder. 00:10:28.480 --> 00:10:32.320 There are employees, suppliers, clients, there's the community. 00:10:32.320 --> 00:10:37.440 So a lot of stakeholders can make this company successful. 00:10:37.440 --> 00:10:47.600 And the dominant view on companies today is that the shareholder is the most important stakeholder, and the shareholder, well, you could say, is the top boss. 00:10:47.600 --> 00:10:53.840 The shareholder has the voting rights at the level of the shareholder meeting and is also the economic owner. 00:10:53.840 --> 00:10:57.440 It can receive dividends and it can sell its shares. 00:10:57.440 --> 00:11:03.360 So that's how most limited liability companies work today around the world. 00:11:03.360 --> 00:11:13.039 But there are also companies that don't see the shareholder as the most important stakeholder, they see their mission as the most important, well, reason to exist. 00:11:13.039 --> 00:11:20.399 So the company itself is worth existing and does have stakeholders that it needs to interact with and treat fairly. 00:11:20.399 --> 00:11:25.279 The capital provider is not no longer more important than the others. 00:11:25.279 --> 00:11:36.639 And uh mainly in Europe, there are some really successful steward-owned companies that work according to the idea that the mission is more important than the shareholder. 00:11:36.639 --> 00:11:45.600 Companies that put their mission first and have shareholders that act as stewards, help the company succeed in realizing its mission. 00:11:45.600 --> 00:11:53.440 Some of those companies are, for instance, Bosch and Zeiss in Germany, Novo Nordisk and Mursk in Denmark, and also in the Netherlands. 00:11:53.440 --> 00:11:59.279 There are around 200 companies today that work as a steward-owned company. 00:11:59.279 --> 00:12:05.120 And it's today quite hard to structure your company in such a way. 00:12:05.120 --> 00:12:11.600 But it's really interesting if companies do so, because these companies have an extremely longer lifespan. 00:12:11.600 --> 00:12:22.240 After 40 years, their survival probability is three to six times higher compared to non-steward-owned companies that are in the same market, so they're competitors, you could say. 00:12:22.240 --> 00:12:30.559 They invest heavily in innovation, which makes them more robust and even makes economies more robust. 00:12:30.559 --> 00:12:40.159 So if you want to make Europe more innovative, more

robust, more competitive, you shouldn't only follow the idea of shareholder premacy. 00:12:40.159 --> 00:12:45.600 You should also offer other options that actually prove to make economies more robust. 00:12:46.320 --> 00:12:52.320 This sounds like a very important project. 00:12:52.320 --> 00:12:58.720 I guess it's also something that firms would ultimately voluntarily opt into. 00:12:58.720 --> 00:13:11.440 And so the past year you've, I think, mounted quite a serious campaign around the 28th regime consultation, produced guidance, you mobilized the steward ownership community. 00:13:11.440 --> 00:13:15.840 Um, but now the Commission's proposal doesn't reflect this. 00:13:15.840 --> 00:13:22.559 So, what is your reading why the argument didn't make it into the text? 00:13:22.879 --> 00:13:24.960 Yeah, so you need imagination, right? 00:13:24.960 --> 00:13:36.320 If shareholder primacy is the dominant model, well, it takes uh time and effort to imagine that it can be different and to also kind of believe that it's not strange to do it different. 00:13:36.320 --> 00:13:50.720 There are examples, a few of the most successful companies in Europe are steward-owned, so they prove and actually show in practice that it works, but still, it's not the dominant model, it's not what we teach our students at business schools. 00:13:50.720 --> 00:13:57.919 If you're if you're a professor in economics, this is not maybe not even on your mind. 00:13:57.919 --> 00:14:03.360 So it's not part of our culture, like shareholder primacy is being made part of our culture. 00:14:03.360 --> 00:14:10.559 So for some people, I guess, also in the European Commission, it's really hard to see that this is actually helping them. 00:14:10.559 --> 00:14:13.120 And I guess they are even a bit afraid. 00:14:13.120 --> 00:14:20.080 If you don't follow the logic of the shareholder being the dominant stakeholder, you scare away investors, and we need investors. 00:14:20.080 --> 00:14:38.799 So they're, I don't know, focused at this um one direction and want to solve an issue by kind of how do you say pleasing capital providers because then capital providers will come, then we will get more innovation, and then ta-da, everything is solved. 00:14:39.120 --> 00:14:44.399 But isn't it also going a little bit against the whole idea behind the taxonomy regulation? 00:14:44.399 --> 00:14:54.000 So one thing that you enable by having steward ownership as an option in the 28th legal regime is that it's just an option. 00:14:54.000 --> 00:14:57.919 So you basically enable investors to invest in different types of companies. 00:14:57.919 --> 00:15:04.960 Uh and if they choose to, they can invest in companies that are uh, yeah, let's say more guaranteed to stay in Europe. 00:15:04.960 --> 00:15:15.919 So one of the main reasons for which many of the founders consider steward ownership is to make sure that once they exit for whatever reason, that the companies stay in Europe. 00:15:15.919 -->

00:15:21.600 So, what do you think needs to still happen to improve the confidence of the European Commission in that regard? 00:15:21.919 --> 00:15:23.840 Yeah, I think you used the right words. 00:15:23.840 --> 00:15:25.519 We need more confidence, right? 00:15:25.519 --> 00:15:34.159 Instead of trying to run to the next steps, you need to take a step back and look at what are we actually trying to achieve? 00:15:34.159 --> 00:15:37.279 How does the worldwide competitive market look like? 00:15:37.279 --> 00:15:40.879 Are we going to win if we use the American rules? 00:15:40.879 --> 00:15:49.279 Or do we have local European treasures, a few of the most successful companies, and should we follow our own route? 00:15:49.279 --> 00:15:52.799 And maybe we don't need to choose one or the other. 00:15:52.799 --> 00:15:55.200 It's exactly like you say, Marija. 00:15:55.200 --> 00:15:57.440 We need to facilitate all routes. 00:15:57.440 --> 00:16:05.279 And if we do that, then we can be competitive like the Americans and like uh in in our own European tradition. 00:16:05.279 --> 00:16:11.440 We facilitate all routes, and I think that would make the your European economy extremely successful. 00:16:11.840 --> 00:16:16.000 So you you see that in a lot of EU dossiers, right? 00:16:16.000 --> 00:16:21.840 That the US is supposed to be sort of the model of what the EU is supposed to be. 00:16:21.840 --> 00:16:22.240 Yeah. 00:16:22.240 --> 00:16:27.840 And it's often also that benefits understood in a very narrow economic sense, right? 00:16:27.840 --> 00:16:34.720 And the US West Coast tech sector, I guess, is a very clear example of that, right? 00:16:34.720 --> 00:16:38.000 Of course, high, super productive sector, right? 00:16:38.000 --> 00:16:42.320 Few employees, incredible profits on investments. 00:16:42.320 --> 00:16:45.919 But then obviously, that also comes with immense inequality. 00:16:45.919 --> 00:16:51.759 I think we've also seen all the the consequences of that for the US itself. 00:16:51.759 --> 00:17:00.080 But then even if that were your goal, that's not something that's so easy to replicate, right? 00:17:00.080 --> 00:17:16.640 And I guess you're absolutely right that there might be these other routes that you might take that you're you're losing sight of because you're so focused on what they're doing on the other side of the if we are going to mimic the leader, we will stay the follower and we will lose. 00:17:16.880 --> 00:17:17.119 Yeah. 00:17:17.119 --> 00:17:26.319 So uh there is this interesting debate between um uh Paul Krugman and a couple of uh economists, namely about the productivity lag of Europe. 00:17:26.319 --> 00:17:34.559 So Europe has been seen to lag in terms of productivity, uh, but you know, there are two different ways of measuring the productivity lag. 00:17:34.559 --> 00:17:43.839 And according to one measure, which is used in Draghi report, the EU has lagged immensely, or so, or its lag is increasing immensely.

00:17:43.839 --> 00:17:54.400 But if you look at uh purchasing power uh measurement of uh productivity, then the EU has actually held steady, steady more or less for the past uh 20 years. 00:17:54.400 --> 00:18:11.680 So the reasons why we want to so much approximate the EU as is this kind of sense that we are losing out massively, but you know, there are possibly ways of thinking about our own productivity that are maybe not as tragic as it is being presented. 00:18:11.680 --> 00:18:25.839 And the kind of positives that we have gotten out of the European model of development uh thus far are still uncomparable to what they have gotten in the US in terms of quality of life, uh the life expectancy, all different kinds of things. 00:18:25.839 --> 00:18:41.920 So I don't want to say that that there is no reason for the EU to become more competitive, but there is an ideological dimension to presenting the EU as extremely uncompetitive and therefore in need to replicate something, either be it China or be it the US. 00:18:42.640 --> 00:18:50.720 Yeah, so look, I think we we all share that concern of losing ourselves completely in these few um macroeconomic variables. 00:18:50.720 --> 00:18:55.039 But still, Hajsbert, I did want to push you a bit on the macroeconomic variables. 00:18:55.039 --> 00:19:06.240 You might think okay, steward ownership that's also a way of achieving a much broader range of societal benefits, right? 00:19:06.240 --> 00:19:07.839 Better employee rights. 00:19:07.839 --> 00:19:12.960 That's unsurprising that that a steward-owned company would do better on these things. 00:19:12.960 --> 00:19:24.240 Do you do you also think there are arguments more from a narrow productivity perspective, for example, in terms of a more long-term orientation of these companies? 00:19:24.240 --> 00:19:25.920 Uh, how do you see that? 00:19:26.480 --> 00:19:36.400 So if a company exists to realize its own mission and stewards, in most cases, they are part of a foundation board holding the majority of the shares in this company. 00:19:36.400 --> 00:19:57.680 If the stewards have the task, have the obligation to support the continuity of the company and uh don't have a financial incentive to act otherwise, um, you see that in practice, indeed, steward-owned companies act more in their own long-term interest, so they look uh ahead further than other companies. 00:19:57.680 --> 00:20:05.440 They they innovate more, uh, they have more reserves, financial reserves, so they have a higher chance of survival. 00:20:05.440 --> 00:20:18.720 And if the markets change, if there's a crisis, then they have innovated instead of only well pushed on marketing the things that work today, um, which again makes them more resilient. 00:20:18.720 --> 00:20:29.279 But if you look at productivity, well, there's not much difference, so there's a higher chance of survival, there's extreme high percentage of uh investments in innovation. 00:20:29.279 --> 00:20:41.680 Yeah, so you get companies that uh focus more, for instance, also on their environmental and social aspects, uh, and don't try to, on the short term, only focus on the financial returns. 00:20:41.680 --> 00:21:00.319 So there are a lot of benefits for society and for the company itself, but the goal is not per se to produce as efficient as possible today, it's more like raison d'être there's a reason to exist, adding value to society while doing so, being financially successful. 00:21:00.319 --> 00:21:10.640 But it's not a goal in and of itself, it's more like a result of working on something that people value, that your customers value, that your employees actually want to contribute to. 00:21:11.119 --> 00:21:11.440 Yeah. 00:21:11.440 --> 00:21:17.759 So if we go back to this conception of the good life of the entrepreneur that we started with, right? 00:21:17.759 --> 00:21:20.480 And that you started your career with. 00:21:20.480 --> 00:21:42.160 So, what I'm hearing now is not just a different way of legally organizing a company or even running a company, but I guess also a very different way of being as an entrepreneur, that it also changes what what it means to be an entrepreneur. 00:21:42.160 --> 00:21:59.759 Might you lose something of this original autonomy where you're just this risk taking investor, and you're doing something that you believe in and deciding quite autonomously, and moving to a more organized corporate. 00:21:59.759 --> 00:22:02.799 Form also of doing business. 00:22:03.039 --> 00:22:03.279 Yeah. 00:22:03.279 --> 00:22:08.640 I would say steward ownership gives you more autonomy because you don't give your voting rights to investors. 00:22:08.640 --> 00:22:13.920 Voting rights are with the stewards that actually want to support the mission and support the company. 00:22:13.920 --> 00:22:21.680 So I guess there are those companies can walk their own path instead of being well directed by the capital markets. 00:22:21.680 --> 00:22:31.119 Regarding the thought that does this fit right with the entrepreneurial spirit, or does this maybe change the entrepreneurial spirit? 00:22:31.119 --> 00:22:33.519 There's a global entrepreneurship monitor. 00:22:33.519 --> 00:22:36.319 It's being done every one or every two years. 00:22:36.319 --> 00:22:37.599 It's a global monitor. 00:22:37.599 --> 00:22:42.640 And one of the questions that are asked is what is your motivation to start a business? 00:22:42.640 --> 00:22:48.880 And in a lot of European countries, one of the main motivators is to contribute to society. 00:22:48.880 --> 00:22:54.559 In a lot of European countries, it's more important than earning a lot or becoming rich. 00:22:54.559 --> 00:22:59.119 So it's not a niche to create societal value. 00:22:59.119 --> 00:23:01.839 It's one of the main drivers for entrepreneurs. 00:23:01.839 --> 00:23:09.519 And we need a legal form that puts that center stage, that puts that in the DNA of companies. 00:23:10.400 --> 00:23:24.480 I mean,

if you really think of freedom as the freedom to create the world as you want it to be, then I think that you can be much more free if you know that what you are creating is really both influential and the good. 00:23:24.480 --> 00:23:27.200 You know, it's you know it's your uh your legacy. 00:23:27.200 --> 00:23:28.079 Your legacy. 00:23:28.079 --> 00:23:31.839 In a way, you start making your legacy at the age of 20. 00:23:31.839 --> 00:23:47.680 And so I also think that historically uh this whole idea of shareholder primacy is something that is, well, maybe it has it has returned relatively recently, uh in particular promoted from the 70s to most famously by Milton Friedman. 00:23:47.680 --> 00:24:04.799 The kinds of companies that Milton Friedman in the 70s opposed were the companies which, to his mind, were too much engaged in social projects, where managers wanted to aggrandize themselves by doing good for society rather than listening to the financial needs of the shareholders. 00:24:04.799 --> 00:24:15.599 So clearly the managers or the founders of teardown companies, you know, they can get satisfaction first and foremost from actually how much good impact you have. 00:24:15.599 --> 00:24:27.119 So we've really over time gotten to the point that we have narrowed down entrepreneurship to very, well, not only simple but also sad and poor vision of what it means to be an entrepreneur, you know. 00:24:27.119 --> 00:24:29.279 And that's really there is more to us, I would say. 00:24:29.519 --> 00:24:30.000 Yeah. 00:24:30.000 --> 00:24:32.480 So so what is a good life? 00:24:32.480 --> 00:24:34.799 You also mentioned a poor life, right? 00:24:34.799 --> 00:24:40.880 So what is a poor life if everything is about money, your life doesn't become richer, right? 00:24:40.880 --> 00:24:41.519 That's a poor life. 00:24:41.519 --> 00:24:51.920 But a good life is if you have the freedom to choose your own path and not be guided only by capital, also as an entrepreneur. 00:24:52.240 --> 00:24:52.799 Yeah. 00:24:52.799 --> 00:24:55.519 Discipline and power of financial markets. 00:24:55.519 --> 00:25:03.200 I wanted to ask uh Heisberg on two relatively uh recent examples of steward-owned companies. 00:25:03.200 --> 00:25:10.880 Uh so Patagonia, a new steward-owned company, very successful example thereof, as opposed to OpenAI. 00:25:10.880 --> 00:25:11.279 Yeah. 00:25:11.279 --> 00:25:15.119 Um steward-owned company which increasingly became less and less steward. 00:25:15.119 --> 00:25:19.920 So, what went well with Patagonia and what went wrongly with OpenAI? 00:25:19.920 --> 00:25:29.440 And so, what kind of legal form do we actually then need in Europe in order to like limit the possibilities of um things going wrong? 00:25:30.079 --> 00:25:33.680 Yeah, so Patagonia became steward on two and a half years ago. 00:25:33.680 --> 00:25:37.599 The founder of Patagonia was still the sole owner of the company. 00:25:37.599 --> 00:25:41.839 So it was almost 50

years ago that he started this company. 00:25:41.839 --> 00:25:48.559 And being the sole owner, he had complete freedom in deciding how to leave his company behind, right? 00:25:48.559 --> 00:25:51.839 He didn't want his children to inherit it. 00:25:51.839 --> 00:25:56.720 He has two children, both are working for the company, and they didn't want to inherit the company either. 00:25:56.720 --> 00:26:01.599 It does didn't feel right, as they say, being a billionaire is a policy failure. 00:26:01.599 --> 00:26:06.160 So and Patagonia was already a stable company, right? 00:26:06.160 --> 00:26:10.640 With its own culture, with a strong corporate governance, with committed people. 00:26:10.640 --> 00:26:19.680 So leaving behind a stable company in a steward-owned structure is something that has been done successfully quite often. 00:26:19.680 --> 00:26:31.039 So most large steward-owned companies that you see today were family-owned businesses or founder-owned businesses, and left by the family or the founder into such a steward-owned structure. 00:26:31.039 --> 00:26:36.640 Then OpenAI had an extremely bumpy start, right? 00:26:36.640 --> 00:26:42.000 It was one of the fastest growing startups uh we've ever seen, I guess. 00:26:42.000 --> 00:26:50.319 With a founder that you could, well, maybe describe as a I don't know, like a monarch or king in his kingdom. 00:26:50.319 --> 00:26:58.799 If you've read the news, he was deceiving the people that were holding uh the voting rights in the company, he was not informing them. 00:26:58.799 --> 00:27:01.759 So his stewards, he was deceiving his own stewards. 00:27:01.759 --> 00:27:02.400 Exactly. 00:27:02.400 --> 00:27:08.400 And his stewards had the task to protect humanity against AI. 00:27:08.400 --> 00:27:10.799 That was one of the tasks of the stewards. 00:27:10.799 --> 00:27:21.200 And you can maybe already feel that there was a growing conflict between the company and the founder of the company that wanted to dominate the market of AI, and the task of the stewards. 00:27:21.200 --> 00:27:30.160 And the stewards selected for this were also, for instance, academia or people that were worried about what AI could do to our societies. 00:27:30.160 --> 00:27:46.160 So there was this growing conflict, and then another reason that it went past the structure is that uh Microsoft was investing billions into uh open AI, didn't get voting rights, but of course, a lot of informal influence. 00:27:46.160 --> 00:27:55.519 Because of well, if your investor says no in the next investment round, well, you will listen to that investor, even if it's if it's not formal. 00:27:55.519 --> 00:28:00.720 And it was also one of the largest suppliers and one of the largest clients. 00:28:00.720 --> 00:28:06.160 So there was a lot of informal power with the CEO and founder. 00:28:06.160 --> 00:28:21.039 There was a huge partner being Microsoft, and when the founder, Sam Altman, was ousted as CEO by the stewards, he shifted to

Microsoft and asked all of his colleagues to also shift to Microsoft, right? 00:28:21.039 --> 00:28:24.160 To leave OpenAI and come out come over to Microsoft. 00:28:24.160 --> 00:28:35.599 And 80% of the people signed the letter, 85% of the employees, to the stewards of OpenAI that, well, they either needed to uh hire back some Altman or they would leave for Microsoft. 00:28:35.599 --> 00:28:38.640 So that would dismantle the company. 00:28:38.640 --> 00:28:46.079 So even a steward-owned company can't resist such pressures, right? 00:28:46.079 --> 00:28:52.559 So steward ownership is not solving everything, it's just a fundament on which a company is built. 00:28:52.559 --> 00:29:06.160 But if people leave, if investors don't want to put in more money, if they are demanding more, if the CEO has so much informal power and acts like a king in his kingdom, well, then even a steward-owned company, even the legal structure can't resist. 00:29:06.880 --> 00:29:12.640 So I guess what these examples nicely illustrate again is how important capital is for the autonomy of firms. 00:29:12.640 --> 00:29:21.759 So in the case of Patagonia, because the owner still held all the shares, he could easily uh decide to make it steward-owned. 00:29:21.759 --> 00:29:34.799 But then in the case of OpenAI, just the immense amounts of capital that they needed for their investment, then also maybe impossible to run on a more traditional steward ownership uh base. 00:29:35.440 --> 00:29:37.759 But I think it it's still possible, it can work. 00:29:37.759 --> 00:29:47.440 But there are if the founder doesn't want it to work anymore and threatens to take all the other employees with him, yeah. 00:29:48.240 --> 00:29:48.559 Yeah. 00:29:48.559 --> 00:29:56.799 Okay, then there's this further challenge in some cases of attracting capital to steward-owned firms. 00:29:56.799 --> 00:30:10.640 So I wanted to push you a bit on how you see that challenge, and maybe that's not so much in the terms of the corporate form, but more a capital markets uh topic, and whether you also see a role there for uh legislation. 00:30:10.960 --> 00:30:11.599 Yeah. 00:30:11.599 --> 00:30:31.200 So if you ask investors whether they like the idea of not having voting rights, because voting rights are with stewards, and not having access to all profits of the company, but maybe getting something in return that is enough, compensating them for their contribution, for their capital contribution. 00:30:31.200 --> 00:30:36.640 Most investors would say, hmm, we rather go for the other model. 00:30:36.640 --> 00:30:46.880 So, but if you ask investors what is your experience with investing in Novo Nordisk and Mersk, you get back totally different answers. 00:30:46.880 --> 00:30:55.279 Answers like, yeah, we really trust that company because it has a long-term vision that will that it will act upon. 00:30:55.279 --> 00:31:07.599 There can't be an activist investor that pushes the company into another direction

because the stewards will still stay true to their original uh strategy if it fits the mission. 00:31:07.599 --> 00:31:14.319 They might listen and pick some ideas from the activist investor, but they don't need to go with the activist. 00:31:14.319 --> 00:31:24.160 Um, and a lot of investors actually like that, especially pension funds and insurers want to have such a long-term perspective for their companies. 00:31:24.160 --> 00:31:35.359 And if companies don't have that long-term perspective, they have to, for their own portfolio, try to create that perspective, having a lot of short-term companies in that portfolio, right? 00:31:35.359 --> 00:31:43.039 But also investors like politicians need to take a step back and rethink what am I what I am actually doing? 00:31:43.039 --> 00:31:44.000 What am I for? 00:31:44.000 --> 00:31:47.440 Do I really need voting rights to be successful as an investor? 00:31:47.440 --> 00:31:49.359 Hey, what if I don't have voting rights? 00:31:49.359 --> 00:31:51.839 Activists can't have voting rights as well. 00:31:51.839 --> 00:31:57.119 And if there are stewards that will make the company successful, and hey, it works, it happens. 00:31:57.119 --> 00:32:01.680 Maybe that also serves my own well goals as well. 00:32:01.680 --> 00:32:08.799 So, yeah, we need to rethink how investors also uh uh can take part in companies. 00:32:09.119 --> 00:32:30.000 Yeah, so I hear uh changing our attitudes or preconceptions about what the what a company should be, um, and then the the legal form supports that, and you think it's not per se a matter of further legislative changes to the investment process. 00:32:30.000 --> 00:32:49.920 Of course, a lot of attention currently at the EU level goes into also creating a single market for uh capital savings and investment union with the idea that similarly to the single market, building a capital market of this size would make it more attractive to invest in in European companies. 00:32:49.920 --> 00:33:11.039 And uh what I hear you say is okay, you know, the real challenge for the stewardship-owned companies is first and foremost just changing how investors think about these kinds of companies, and there's maybe not a further step into terms of capital market policy that you would need. 00:33:11.599 --> 00:33:20.559 Well, what I do think that is also important is that there are also public investors, and funny enough, those can be the most conservative investors out there. 00:33:20.559 --> 00:33:29.279 So the European Investment Bank, for instance, is also really important through its funds, a really important investor in Europe. 00:33:29.279 --> 00:33:41.039 And we've had several instances where European funds were the most difficult to convince that steward ownership would actually fit their bigger goals. 00:33:41.039 --> 00:33:52.799 Um yeah, we had some funny conversations where European fund came with four lawyers trying to understand, getting their head around this crazy model.

00:33:52.799 --> 00:33:59.920 In the end, we convinced them at them, and they were like, hey, maybe we our fund is using the wrong model after all. 00:33:59.920 --> 00:34:06.160 Maybe this model of steward ownership fits better with the reason why our fund exists in the first place. 00:34:06.160 --> 00:34:14.880 So private investors should definitely shift, but public investors shouldn't should shift as well, right? 00:34:14.880 --> 00:34:28.880 It also helps if politicians also create language about this uh to give those public investors the ability and um approval also in a way to explore and do this. 00:34:29.920 --> 00:34:34.960 Well, I guess there you just you do come back to this issue of capital, right? 00:34:34.960 --> 00:34:48.480 And then particularly something like the European Investment Bank, many uh public investment vehicles work with relatively low levels of uh paid-up capital, right? 00:34:48.480 --> 00:34:57.760 And then by being very conservative in their lending practices, they are able to borrow very cheaply in international capital markets, right? 00:34:57.760 --> 00:35:00.880 EIB I think has a triple A credit rating. 00:35:00.880 --> 00:35:07.840 But that then, of course, translates into a type of investment exactly what what you are describing. 00:35:07.840 --> 00:35:26.800 Uh whereas now this has, I think, been very clear in the case of China, where the state has taken on much more risk-bearing, very targeted investments in in specific very innovative firms, also often making really big losses on some of those, right? 00:35:26.800 --> 00:35:38.159 But taking risk in a way that for now is is very uh uncommon for for uh EU member states and investment vehicles. 00:35:38.159 --> 00:35:53.519 Yeah, um, so I I I guess I do hear something there where in addition to the legal form, there might also be room for thinking about how you want to fund some firms with with a more steward-owned corporate form. 00:35:53.519 --> 00:35:56.239 I see Marija has a thought on that. 00:35:56.800 --> 00:35:59.840 I have a I have a thought because I think it links to a broader topic. 00:35:59.840 --> 00:36:08.000 So having a form or legal form of steward ownership would actually be very helpful for all kinds of public investment in companies. 00:36:08.000 --> 00:36:10.719 For instance, recently happened in the in the Netherlands. 00:36:10.719 --> 00:36:46.239 We have seen uh important uh digital companies which run our uh citizens' data uh being eventually bought by external companies, or companies, in this case the US company, where you actually could think uh that having steward-owned companies which are of strategic importance could be a very helpful tool for the EU and its member states to actually make sure that things do not deteriorate, that its own infrastructures, digital or or financial or other, cannot be so easily bought and and exported uh in a way. 00:36:46.239 --> 00:36:55.039 So and this could also work for public procurement, this could work for all kinds of things where you actually want to uh make sure that certain guarantees are there. 00:36:55.039 --> 00:37:11.119 So I would like to I ask Heisberg to speak a little bit more about recent concerns about digital sovereignty and how the whole discussion about steward ownership has entered into the public domain in the Netherlands, but also I think uh more broadly at the EU level. 00:37:11.519 --> 00:37:12.719 Yeah, good point, Marija. 00:37:12.719 --> 00:37:23.519 So um we are outsourcing a lot of our digital infrastructure to Europe through American uh uh big tech companies, and there's a lot of data. 00:37:23.519 --> 00:37:35.519 It might be stored in Europe, but that is serviced on platforms that are owned by American companies, which makes them also fall on under American legislation. 00:37:35.519 --> 00:37:41.760 And American legislation has several challenges to it. 00:37:41.760 --> 00:37:59.599 One of them is that the American government can request access to data through American companies, even if the company is, for instance, like a daughter company of an American company and fully based in the Netherlands, the American government can still demand access to the data. 00:37:59.599 --> 00:38:01.840 And the company should give that access. 00:38:01.840 --> 00:38:20.719 So if all our public uh information about citizens, our tax statements, etc., etc., is serviced by these American companies, the American government can demand access to it and well, use that to further its own worldwide mission. 00:38:20.719 --> 00:38:25.280 Especially now, that could be a challenge, right? 00:38:25.280 --> 00:38:41.360 And then the the American government could also decide to sanction a person or an organization, meaning that uh all the services provided by American companies to that specific organization or person also need to be shut off. 00:38:41.360 --> 00:38:53.360 So if we are dependent for 80% of our digital life on American companies and the American government doesn't like this or that person or organization anymore, it can shut down 80% of digital life of that person. 00:38:53.360 --> 00:38:57.679 So our society is becoming more digital, more online. 00:38:57.679 --> 00:39:04.079 And we've handed power to our digital society to a non-European government. 00:39:04.079 --> 00:39:06.400 So that's a huge issue. 00:39:06.400 --> 00:39:14.719 So governments, for instance, chose for Dutch digital service providers who were then bought by American uh big tech. 00:39:14.719 --> 00:39:18.480 And the Dutch government couldn't do anything about it, right? 00:39:18.480 --> 00:39:32.239 But if this Dutch service provider would have been steward-owned, and the government would have known while looking for a service provider, they could have chosen that one and be sure that uh it couldn't be bought by any outside company. 00:39:32.320 --> 00:39:32.960 Yeah, okay. 00:39:32.960 --> 00:39:41.440 So what so what I'm hearing, and I think

you and me are very much thinking along the same lines on this, there's sort of a two-pronged side of the story, right? 00:39:41.440 --> 00:39:51.280 There's on the one hand creating a uh a largely voluntary 28th regime in which you can have the the corporate form steward-owned. 00:39:51.280 --> 00:39:59.039 But then once you have that legal form, actually there's a whole range of policy measures you can take to incentivize. 00:39:59.440 --> 00:39:59.840 Adoptions. 00:40:00.239 --> 00:40:00.800 Adoption. 00:40:00.880 --> 00:40:01.039 Yeah. 00:40:01.440 --> 00:40:03.119 Adoption of that legal form. 00:40:03.119 --> 00:40:03.360 Yeah. 00:40:03.760 --> 00:40:07.599 So what we are trying to uh stress are the options that this gives governments. 00:40:07.599 --> 00:40:07.920 Yeah. 00:40:07.920 --> 00:40:26.719 So it's not only companies that have options to opt into that kind of form, but also governments have options to have a broader variety of measures they can use in their own operation than devising its own economic operations, its own digital strategy and such. 00:40:26.719 --> 00:40:31.519 So it is really important to see that this is a huge service to the governments themselves. 00:40:32.320 --> 00:40:41.920 So what what I'm hearing is on the one hand a voluntary scheme, but on the other hand, government incentives and maybe even imposing this in some cases. 00:40:41.920 --> 00:40:50.639 Now thinking this through is also sounds like quite an interesting alternative to more traditional competition policy measures, right? 00:40:50.639 --> 00:41:09.360 So currently you competition policy is based on the idea, okay, if you create markets then that are contestable, then firms won't become too powerful and you will be able to uh mitigate any any undesirable effects of the operation with legislation. 00:41:09.360 --> 00:41:31.840 But I guess what what I'm hearing is also something like okay, in some cases, certain kinds of companies, you don't per se maybe want to have them publicly owned, but you could make them steward-owned to protect certain specific public interests, and that that that would then be in the in the in the charter or so of the what is the traditional structure of those companies? 00:41:32.000 --> 00:41:44.559 Because they are at present they are complex forms, but there are different ways in which you can devise a steward-owned company, mainly because there is no an actual legal form that enables you to do this. 00:41:44.559 --> 00:41:54.000 So companies are doing all kinds of things in order to create this function of stewards who have actual veto rights over certain issues. 00:41:54.400 --> 00:41:57.119 Yeah, so right now it's kind of legal hacking. 00:41:57.119 --> 00:42:20.480 You use the existing legal structures in which the shareholder is the dominant stakeholder, and you look at shares having voting rights and economic rights, so uh the distribution of dividends, and you try to look at that as separate rights, and you try to turn those voting rights not into a power anymore, but into a responsibility. 00:42:20.480 --> 00:42:25.840 And you give that responsibility temporarily to the people you could call stewards. 00:42:25.840 --> 00:42:38.480 They could hold these voting rights shares in person or through a foundation and be board members of that foundation, and in the charter of that foundation, it could be really clear what their task is and how they relate to the company. 00:42:38.480 --> 00:42:45.599 And they do would not personally own the company, it would be something they do because it's what they are asked to do. 00:42:45.599 --> 00:42:51.440 They can't sell their shares, it's like a regular board, so to say, you can select new board members. 00:42:51.440 --> 00:43:04.960 And if there are outside investors or entrepreneurs that need to be compensated, or maybe also employees that share in the profit, they could have dividend rights without necessarily having the voting rights, because that's already with stewards. 00:43:04.960 --> 00:43:11.199 So you look at those two rights as two types of share classes with a different function. 00:43:11.840 --> 00:43:28.719 This idea of using forms such as steward ownership instead of competition law has been already aired in the in the US, uh, for instance, by Elizabeth Warren, who said that every company which has a certain size above, I think, one billion dollars, should become public interest corporation. 00:43:28.719 --> 00:43:32.480 The large companies have huge impact on our world. 00:43:32.480 --> 00:43:36.480 That huge power has to be turned to good purposes and good direction. 00:43:36.480 --> 00:43:46.159 So either you you need to lower the power by splitting the companies, or one could turn them in more steward-owned companies or public interest corporations in the US. 00:43:47.280 --> 00:43:48.239 Actually, both of you. 00:43:48.239 --> 00:43:50.159 Just a really big picture question, right? 00:43:50.159 --> 00:44:27.599 Because I now when I hear the proposals in this form, they remind me a lot about um worker ownership proposals from the nineteen seventies right and there for example in Sweden in the UK you had these discussions and in in the Netherlands for example this this ended up in the Medeseggerschap mitbestimmung in Germany where the idea was yeah we should give the employees of the company much more say in the governance of the firm with I think very similar motivations as as the stewardowned firm but there is we haven't talked about employees. 00:44:27.599 --> 00:44:38.400 Are there very clear advantages of a steward-owned firm as compared to a worker-owned firm do you think these are very continuous proposals? 00:44:39.039 --> 00:45:14.239 Well maybe first the reflection is that Mietbestimmung and medeseggenschapsraad in in the in the Netherlands you can't choose for them right you have to use that models so it's law and everyone needs to follow that role it's not an option it's an obligation

steward ownership will never be an obligation it's it's about creating an option so I think in the 80s there was a wave of companies choosing for steward ownership and I think it was also in that time a lot of companies choosing for worker ownership and in some cases it was also combined. 00:45:14.239 --> 00:45:25.440 So for instance a foundation became the sole owner of a company with the board of that foundation being the workers I even know one example where all workers are board members. 00:45:25.440 --> 00:45:53.039 It's a relatively small company with 18 employees so 18 board members in the foundation and you can also have a representation of workers as stewards of the company and in most cases you actually see that that some of the stewards in some cases majority and in some cases even all of the stewards are chosen by the workers and can be also a worker at the company itself. 00:45:53.360 --> 00:46:08.960 But yet you are in favor of steward owned you're you also think there are clear advantages of having people are not employees and you also think there can be constructions when there are no employees in the can work could work also really well. 00:46:09.119 --> 00:46:21.280 So a challenge or a pitfall if a company is worker owned is that the worker becomes the dominant stakeholder and steps in the same pitfall as the shareholder could step in. 00:46:21.280 --> 00:46:40.719 Maybe it will not be as disastrous because it's someone who also works at the company has his job at the company but there are examples where workers decided collectively to sell the company to a private equity firm in their own self short term interest and not in the interest of the next worker or the next employee. 00:46:40.719 --> 00:46:49.599 And I think that's where steward ownership comes in you are not privately owning the company you are temporarily taking care of it. 00:46:49.599 --> 00:47:04.800 And it's not your ownership it's your responsibility and that responsibility could lie with the workers but it might also be that you need other perspectives besides the employee perspectives to together be good stewards of that company. 00:47:04.800 --> 00:47:20.239 In most cases it's also for instance people that retired and worked for a similar but a bit larger company and can actually help the board or the directors of that company to take a next step to challenge those people to take a next step. 00:47:20.239 --> 00:47:24.960 Maybe employees are not the best ones to to challenge the CEO of a company. 00:47:24.960 --> 00:47:38.079 So yeah it depends who is at this point in time given the development of the company the challenges of the company the best steward for this company it might be the employee. 00:47:38.480 --> 00:47:43.840 I do think that they would fit to different contexts or different situations uh one or the other better. 00:47:43.840 --> 00:47:48.800 I think it's going to be more easy for people to imagine than steward own company. 00:47:48.800 -->

00:48:02.159 So for like a normal person transitioning to the system where the employees own the company is going to be much more easily imaginable for somebody in a small town who owns a small company. 00:48:02.159 --> 00:48:22.000 So I do think they will play different different roles and I think it would be very good to have those options there in particular because of the changes through which the EU is going through now where I think we have hundreds of thousands of enterprises where the founders or the owners are going to go to pension in the next years and have no succession plans. 00:48:22.000 --> 00:48:27.199 I think the huge advantages of of employee owned firms is that they're also much more locally embedded. 00:48:27.199 --> 00:48:32.000 They are much more sensitive to the context or community in which they are based because they live there. 00:48:32.000 --> 00:48:59.360 So it's very difficult to pollute massively a space in which you live yeah so I think they have a lot of additional social benefits as would steward own companies but I think they really serve a different purpose maybe this is also where the European Union could play a really important role to actually show those people that will retire those founders or entrepreneurs to show them different paths because most people don't know that these options exist. 00:49:00.639 --> 00:49:19.440 Coming back to the 28 regime creating such a path and making it really easy instead of a legal hack with endless possibilities you should have a really easy route and that is why it's so important for the 28 regime to also include employee ownership and steward ownership. 00:49:19.440 --> 00:49:26.000 So we've been talking about some of the potential legal hacks now together and legal geeks will love it. 00:49:26.000 --> 00:49:43.840 But this small town entrepreneur looking for succession might need a really easy solution and just sign a notary deed instead of going to uh to a big city lawyer that might understand this. 00:49:43.840 --> 00:49:49.760 And the easy solution that can be part of the 28 regime is that you have kind of a switch. 00:49:49.760 --> 00:50:07.199 A switch where you say hey are the voting rights with the shareholder or are they with the steward board and if they are with the steward board this steward board is created and you can look for stewards for this particular company and then you don't need a legal hex anymore. 00:50:07.199 --> 00:50:14.159 You've kind of bypassed the power of the shareholder within single unit. 00:50:14.159 --> 00:50:19.840 Exactly and then it becomes accessible for every entrepreneur in Europe. 00:50:20.719 --> 00:50:58.400 Of course they still need to know it exists but that's the next challenge so to say okay Geisbert I think this has been an incredibly interesting and uh enlightening conversation on a very specific legal dossier but that also then uh has implications for the future of the European corporate firm landscape and also I guess very clearly has this very nice konkret component but also this more utopian vision of what what the European economy could look like in the coming decades? 00:50:58.400 --> 00:51:24.400 Maybe to to close on this do you still want to say something on on how you envisage in the in the good case what what the landscape looks like in say twenty thirty five twenty forty five what percentage of companies would you hope would take this this form of organization and and what's it like to be an entrepreneur? 00:51:26.079 --> 00:52:28.960 Well if you look at Denmark as an example in Denmark there is a legal form for steward ownership around 10% of Danish people work at steward owned companies the Danish economy is one of the most resilient economies of the European Union if you look at how it kind of in the wake of the financial crisis but also the corona crisis how the economy reacted research says that steward owned companies helped the economy to go back to stages of before the crisis if like in Denmark we also have such a legal form I think it at in 2040 when most baby boomers have retired maybe all of them maybe most either sold their company of made it or made it employee owned or steward owned I think 10% of those companies can be steward owned and that would not dramatically change the European economy so it not will not be like a shock to the economy. 00:52:28.960 --> 00:52:36.000 No I think it will be a niche but it will be a niche that makes this economy more resilient like the Danish economy. 00:52:36.000 --> 00:52:41.679 So it's not an experiment right the Danish helped us experiment now we can use this experiment. 00:52:41.840 --> 00:53:22.880 So don't follow the Americans follow the Danes I mean compare the life thank you uh so uh thanks to Heisbert and thanks to our listeners and you will hear from us very soon again was written and hosted by Marija Bartle and Jens van der Kloster with special thanks to this week's guest Heisberg this podcast was produced and edited by Heather Freeman with music from epidemic sound was created with support from the University of Amsterdam. 00:53:22.880 --> 00:53:45.599 We'd love to hear from you visit eudaimonia dot buzzsprout dot com to learn more about the show and leave us a message that's E U D A I M O N I A dot Buzzsprout dot com Thanks for listening we'll have a new episode every two weeks