Armin Steuernagel in an entrepreneur in food, co-founder of the Purpose Network and impact investor. Purpose Network helps companies to stay independent and mission driven for the long term.
Who has the real power in your regenerative company? Money? Family? Or Purpose? Did you dare to ask the power question?
Purpose Network helps companies to stay independent and mission driven for the long term. They believe that by innovating the way companies are owned, financed and governed, companies become more successful in the long run and can benefit all of society. Stewart owned companies make a legally binding commitment to their employees and customers that the company is not a speculative good or commodity, but a group of people working for a purpose. This all sounds extremely interesting and very relevant for the regenerative food and agriculture sector.
The company Armin co-founded in organic food for children
Main steward owned principles:
– Self governance isn’t tradable, steering wheel is always hold in trust by stewards of the company
– Purpose, the company has a clear purpose
How to achieve the Mission lock?
– Golden Share, veto share etc.
Logona sold recently to L’Oreal:
Another example of an evergreen fund:
- We are working on Alternative buy out capital
- Steward ownership fosters intrinsic motivation
- We are getting into time where it is important for your brand how you are owned
- Normally you invest and you get power, but not in this case
- Closed end fund structures is one of the reasons why we are selling companies again and again and again
- So many impact investors go in and measure and make sure there is an impact, but then they go out and then what?
- Ask the power question: who owns the steering wheel? Can you buy it or can you inherit it? Or do you have another principal, where ability and values decide if you can steer the company
If Armin could change one thing in the food and agriculture space he would change land can only be by people in trust, by stewards and doesn’t become a speculative commodity. Plus designing ownership structures for food and agriculture to make this easier.
Previous podcasts on Land Ownership:
With Thomas Rippel on land ownership:
- Thomas Rippel, using a blockchain to help Farmland Stewardship Organisations grow
- Thomas Rippel, checking in on land ownership, stable coins, pensions for farmers and city folks
Ian McSweeney of the Agrarian Trust:
TEXT SUMMARY OF THE INTERVIEW:
Armin Steuernagel: There was one particular moment or one particular event that somehow pushed me to think even more about it. That was actually an employee of mine. So I founded also one company in the organic food sector and organic food for children and my co-founder and I, we always told everybody- ourselves, our families, but also our employees- “Well, we were all getting up every morning to get children excited for good and healthy food. That’s the reason. You know, that’s why we’re working here”. And one day, one of the employees of us came to us and said “Wait a minute”. Is that actually true? Are we actually working for that purpose or aren’t we actually working for you both? Because you can monetize it. You can sell it. You can pass it on to your children. They can monetize it, etc. Aren’t we actually working for your wealth? And that was kind of a provocative question, but we realized legally she was right.
Armin Steuernagel: And so, I realized, you know, without intending it, without wanting it, I had set up a legal entity that would somehow serve my wealth.
So that that somehow felt strange, that’s when I realized that there is something wrong. I have to look for different ownership structures to somehow make sure that we can all work really for a purpose here and that I can remain a steward and don’t become just a normal, you know, shareholder and in the future an absent owner who just collects profit.
Armin Steuernagel: Two main principles that I became to believe that they are actually the core of really making sure that a company is steward owned as I call it or, you could also say, self owned. And so one thing that all of them make sure is there is self-governance. So they all somehow make sure the majority of the voting rights, the majority of the steering wheel basically of the company isn’t a tradable commodity anymore. So the steering wheel cannot be sold. It cannot be passed on to children.
Armin Steuernagel: And the second principle, besides the self-governance principle, is the principle of purpose that all of these companies, even big companies like Bosch, really adhere to. And that’s the principle of purpose. That basically says our entire endeavor, our company is there for a purpose. And yes, we need to make profits. But profits are seen as a means to an end and not an end in itself. And what does it mean concretely? It means you are if you should make profits, of course, you pay back investors or you’re paying even a good return to investors. But then the rest, you are reinvesting, you’re donating and you’re capping the upside for all stakeholders to make sure that there’s enough money being reinvested and used for the purpose.
Koen van Seijen: We often talk about impact, but maybe leave it at that. And things change. Companies change, interest change, personal situations change and maybe at some point we find ourselves in a position where there is an offer or a lot of money on the table like in many cases or like the organic food movement now is being threatened by that. And it’s very difficult to say no to that. And there’s a huge, huge offer on the table. We maybe forgot to make that logical next step to actually make it a legally binding agreement to not change the mission.
And unless you have that, there are only very few people that say no to I don’t know how many pensions and their children’s pensions and who’s to blame if somebody offers 200 million or 50 million or whatever the number is for your company, did you and all your colleagues worked for so long? The problem is it goes to one family.
Armin Steuernagel: I would say our human psych is not built to resist to that kind of 100/200 million offers.
Armin Steuernagel: Especially one industry is currently under attack. And that’s, of course, the industry that you’re also working in, the organic food industry and agriculture industry with all the pioneers who really wanted to change the world.
And now, for years, nobody was interested in their companies and suddenly everybody becomes interested and wants to buy them.
Armin Steuernagel: One good example, there is Organically Grown Company OGC in the US, Portland, Oregon. That’s the second largest organic produce wholesaler in the US I think. And with only 200 million in revenue and 200 employees, they were founded as a coop by farmers already 30 years ago.
And that’s when they realized, oh, damn, you know, we’re in a very dangerous situation around us. All of the, you know, organic pioneers are bought up by, you know, Seven Generations was bought up. We you know, that Whole Foods was bought by Amazon etc. We have to change something. And they looked around, said “Ok, we want to actually setup something like steward ownership”.
Armin Steuernagel: And what they found is a very, very unknown structure. It’s a Perpetual Purpose Trust. That means it’s a trust that, unlike all other trusts, doesn’t have any beneficiaries, any natural persons as beneficiaries. But it has a purpose. In that case, it’s organic agriculture as the purpose. And it’s perpetual. So it doesn’t end. And they set this up. And now the question was, how can we get the company in there? And that’s when they needed financing and also a new kind of financing, they needed basically alternative buyout capital, alternative private equity capital in order to buy old some of the old investors. And that’s when we went in there and we negotiated with them.
Armin Steuernagel: Probably the most impactful would be to have a law that basically makes farmland steward owned in that sense. So everything that I was talking about, companies now that for land.
Armin Steuernagel: They are not asking what I would call a power question. Steward ownership is asking the power question, who has the power in our companies? Who has the power in organizations we’re all spending most of our times in? Are these people who can buy the power? So is this money? Is this the principle of money? Or are these people who just by chance inherit the power? Is this the principle of blood or do we have another principle, the principle of purpose or stewardship? That somehow makes sure there are always people that are able and values aligned, ability and value relatives. So a different kind of family, so to say, so to speak, that are getting the power there. And that’s a deep power question.
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