Interview with Evan Edwards, CEO of Project Equity
Project Equity is a San Francisco Bay Area organization on a mission to grow community wealth by helping businesses transition to employee ownership.
We talked to Evan Edwards from Project Equity about harnessing the power of employee ownership for a just COVID-19 recovery, closing the racial wealth gap, and empowering workers. Headquartered in the San Francisco Bay Area, Project Equity is inspiring a growing national movement of employee ownership while providing hands-on consulting and support to businesses in transition.
I know you started your career in the for-profit world—what led you to working with Project Equity?
I have spent the better part of my career in the startup and early growth tech space where the majority of enterprises provide equity to employees. From a personal perspective, I’ve benefited from being an equity holder. I saw it as a powerful wealth creation tool even before I understood the possibility of democratizing it and making it available to workforces more broadly.
About five years ago, I heard a piece about Project Equity on NPR Marketplace. At the time, I was exiting a business that I had helped found and, more broadly, experiencing a shift in my personal priorities. I come from a family of what you might call social justice warriors and it's always been a part of my makeup to pass it forward. I've done that on a personal level before in many ways, but the ability to be able to manifest that professionally wasn’t something I had thought a whole lot about. Hearing about Project Equity was like a light bulb going on. It's the perfect match between my skill set and my interest.
Why is employee ownership so important right now?
We have a significant racial wealth gap in this country. It's become more acute over the past 30 years and the pandemic has made the problem even worse. At the same time, we're at a unique time in US economic history, where we have baby boomers who own the vast majority of small businesses retiring in the next five to 15 years, and most of those businesses will close. But these businesses could transition to employee ownership instead. What’s especially exciting is that we can transition workforces with high densities of Black and Brown and women workers—folks that have difficulty accessing capital to start a business of their own, or who may not have an academic background to start a business–and they can become employee owners. Employee ownership provides a pathway to business ownership and with it the economic benefits that can come with business ownership.
And it's done in a manner that is within existing merger and acquisition business models. Small businesses are bought and sold every day. It's just that those transaction models don't currently include employee ownership transitions.
What are some other challenges that the employee ownership movement has and what does the employee ownership movement need right now?
It needs a couple things. One is a higher profile because not enough people in the business ecosystem understand that either A: the models exist; or B: that they exist and are great investments. The other thing we need is technical skills. CPAs, attorneys, capital providers and other small business advisors need to have the technical skills to engage employee ownership transactions. The skill isn't really difficult to attain. The trick is understanding the nuances of the models and then incorporating them into existing practices. At Project Equity we do both – we’re raising awareness and providing education and training to create these transitions.
And our partners are essential. ICA and other folks in the field can amplify these value propositions and help raise awareness, which can help drive business owners and business connectors or influencers towards employee ownership models.
If there was one thing that you would really want people to know about employee ownership, what would it be?
I’d like people to know that employee ownership supports a more robust economy for all. We all benefit when businesses become employee owned. There needs to be an understanding that employee ownership represents a tremendous amount of value to workers, to communities, and to current business owners.
There’s a saying that a rising tide lifts all boats. Well, if there are more workers who are business owners, that supports a healthier economy across the board. There's a really broad economic benefit to employee ownership. In this country, we've always held up small business owners as these great successes in our communities. That translates to worker owners. It helps to support the fabric of a strong community and build strong economies.
How does this model impact the lives of employee owners?
One of our client companies has distributed over a half a million dollars in patronage among 35 workers in the past three years. This level of profit sharing has enabled these workers to be able to retain residences in the Bay Area.
Another example—there's many but this one stands out—is of a woman who worked at one of our client companies, a bakery. She mostly made minimum wage her whole life and then her first profit sharing check was $9,000. She's a single mom and she sat down with her son and showed the check to him and said, "We're going to save most of this, but I want you to help me decide how we're going to spend this to make our lives a little bit better.” For me, that's where the rubber meets the road.
It truly can have an impact on a worker's life because they're now participating in the success of the business as owners. At the end of the day, I'm in this work because I know the positive impact that it can have.
How has COVID-19 affected the movement for employee ownership?
What we saw, and what we're continuing to see through COVID, is business owners are challenged to recruit, retain, and reward their workforces. We’ve found we can engage business owners and local policy makers around employee ownership as a strategy to create better working environments and work opportunities and help businesses recover from the pandemic.
Further, during the pandemic we saw that employee owned businesses were able to be more resilient. Companies that were already employee owned were able to make decisions that were more supportive and beneficial across the board. Workers could be at the frontline of decision making as opposed to in a circumstance where there's a sole owner calling all the shots and not taking into account workers and their individual circumstances.
Finally, it revealed how employee ownership becomes a recruitment tool. If I'm a business owner and I can say to prospective workers, "Hey, if you come work here, you become a worker-owner and you have equity," and they compare that to the shop down the street that doesn't offer that, where is that worker more likely to sign up?
Learn more about Project Equity and Employee Ownership: