The other night I had dinner with Dan Woolley and Greg Robertson, two friends who are serial entrepeneurs now working on building their third business, Dwellicious. During dinner, we had an excellent discussion on the pros and cons of an ESOP and employee ownership. When I got home from dinner, I cruised through my feed reader and came across Glenn Kelman’s post A Free Call on the American Economy, which I think summarizes the issues quite well (in my words): owners are inclined to survive and entrepreneurs need to strive.
Entrepreneurs are risk takers, willing to step up and out in order to create something new. The emphasis is on something new — they want to create that new business and will do whatever it takes to make it grow. Owners, in contrast, are more conservative. They’re looking long. They already have something they’re looking to grow and build upon, and not lose. These are entirely different perspectives, whether you have your own money on the table or not.
During dinner, Greg asked why I turned FBS into a 100% employee-owned company as opposed to going it on my own. My response was longer than I want to write now, but a decent summary is that I’m an owner and not an entrepreneur. I don’t want to take huge risks but I want to grow FBS with like-minded people. Making employees owners is all about risk distribution, creating accountability, and building a company designed to last.
At the same time, this from Glenn’s post resonates with me: “So while ownership is an important virtue, the willingness to take risks on a big idea is too.” There’s no doubt risk-taking is important to every business, otherwise you stagnate and likely die. This is the challenge we have before us, how to maintain our ownership mentality while taking sufficient risks to grow.