Welcome to Employee Ownership! (Without the Hype)
In our latest podcast episode, Kris Maynard and Justin Jordan, who’ve been running an ESOP for 15 years, talk about what’s gone wrong—including a scary trip to Death Valley—and what’s gone right.
Good morning!
Here are today’s highlights:
Before you send more money to Google Ads, Alan Pentz thinks you should ask ChatGPT to help you make better use of the leads you have.
Gene Marks, who says he’s as capitalist as they get, thinks a Medicare for all plan would be great for small businesses.
Here’s how The Row gets people to pay $500 for a plain white T-shirt.
Marc Lore says his startup, Wonder, is building “the Amazon of food.”
THE 21 HATS PODCAST
This week, we dig into employee ownership with two people who’ve lived it: Kris Maynard and Justin Jordan, of Cathedral Holdings, a 100-percent employee-owned ESOP since 2011. Kris and Justin are enthusiastic proponents of ESOPs, but they’re also candid about what can go wrong. Yes, ESOPs come with big tax advantages. But the transaction can be complex. The debt can fundamentally change the risk profile of a business. And perhaps the most under-discussed challenge of all: not all employees embrace employee ownership. Some see it as little more than a glorified retirement plan.
And here’s the thing: an ESOP can be a far riskier retirement plan than many understand. They differ from 401(k)s in that there’s no regulation requiring an ESOP to sequester its employees’ retirement funds. If the company fails—and like all businesses, ESOPs do fail—those nest eggs can vanish. Kris and Justin explain how they’ve addressed these issues and what they might do differently if they were starting over.
They also emphasize an important point: Not all ESOPs are created equal. “If you’ve seen one ESOP,” Justin likes to say, “you’ve seen one ESOP.”
