Good morning!
Here are today’s highlights:
Rob Levin writes that replacing key employees has rarely been harder (so try not to lose them).
Ami Kassar cautions against outsourcing your judgment to AI.
There’s a lot to be learned from solo-operated businesses that exceed $1 million in revenue.
A startup says it can test customer reaction to new products and services faster and cheaper than traditional market research.
THE 21 HATS PODCAST: DASHBOARD
The ESOP Risk Nobody Talks About: ESOPs are often presented as one of the best ways for a business owner to exit. You preserve your company’s independence, reward the employees who helped build it, and create a retirement benefit that can be life-changing for the people who stay with the business. What gets less attention is that ESOPs are still businesses. They can lose customers. They can hit hard times. And because employees’ retirement savings are often tied to the company, the stakes can be even higher than they are at a conventionally owned business.
This week, Roland Burdett tells the story of Miklos Systems, a Virginia defense contractor that became an ESOP in 2006 and spent nearly two decades building an ownership culture in which employees truly thought and acted like owners. Then came the pandemic, the Great Resignation, and, most recently, the uncertainty created by DOGE and deep cuts to federal contracting. Suddenly, Roland found himself worrying not only about his employees’ jobs, but about their retirement savings as well.
Rather than continue rolling the dice, Miklos made the difficult decision to sell itself to a larger defense contractor. Roland takes us inside that process—from explaining the decision to employee-owners, to working with an outside trustee who ultimately had the authority to approve the deal, to the surprising complexity of unwinding an ESOP after 20 years.
Along the way, he offers a refreshingly candid look at both the strengths and the limitations of employee ownership, and why, in the end, protecting the people who had helped build the company meant giving up the independence they had worked so hard to preserve.
You can subscribe to the 21 Hats Podcast—brought to you by Grasshopper Bank—wherever you get podcasts.
