GREENSAW Blog: January 2011

Wednesday, January 19, 2011

Op-Ed: By Jim Steiker, the oldest young employee ownership lawyer in America

So Greensaw believes in "re-using material, and building with existing structures." There is a history to worker cooperatives in Philadelphia. Omega Press was a worker-cooperative printing company in the '70s and '80s, back when there were printing companies. House of Our Own was a worker-cooperative book store in West Philadelphia. The Philadelphia Association for Cooperative Enterprise ("PACE"), my original employer, promoted worker cooperatives for 10 years in the Delaware Valley in the '70s and '80s from center city offices and helped form a worker-cooperative supermarket in the Strawberry Mansion part of the city. Childspace is a worker-cooperative day care center in Mt. Airy and Germantown providing high quality child care today. There's material to reuse and structures to build on in this history.

Why did most of these worker cooperatives fail, or, at least, why aren't they around any more? The short answer is that they didn't make enough money to maintain themselves. For those who pick on Enron as the emblem of the failure of ESOPs, Enron fundamentally had the same problem. The ownership structure does not matter if the business can't make a sufficient profit to stay in business and provide an adequate reward for ownership.

The worker-cooperative movement is and has been about creating cohesive companies with a shared sense and reality of ownership and mission. The beauty of the structure is the dignity it creates for each employee owner and the cultural and class differences it breaks down in involving and rewarding each employee owner.

There is no dignity in "lemon socialism". This is America and folks want to play for a winner. We can define winning in a lot of different ways, we can view the game as a team sport, and we can win as a team but winning matters. Greensaw will succeed as a business because it has a winning business proposition for its customers, who ultimately pay money to Greensaw for Greensaw to do its work. The worker cooperative can make Greensaw better as a business and increase its appeal to its customers because of the ability of the structure to attract and retain great people and the ability of the people to make Greensaw a great place to work and be.

One downside of the worker-cooperative structure is the degree to which the members can focus inward on each other, endlessly defining and negotiating the rules of the game, rather than focusing outward on customers and the need to succeed as a business. My best answer to Beeg's bourbon-fueled lament is that he should form his own company if he thinks that's a better opportunity than the one in front of him to buy the business from Brendan and continue and build it as a worker-owned cooperative. Brendan's got the right and ability to get a fair return for what he's built and his job is to develop a good transition to worker-ownership that creates an attractive opportunity for Beeg and the rest of the folks at the company. This may involve making sure that the longer-time key folks get more in either pay or ownership from the business--this isn't unfair and doesn't undermine the worker-cooperative structure as long as each member with the ability and the commitment to the enterprise ends up with the same opportunity.

Finally, why do I do primarily ESOPs now, rather than worker-cooperatives, despite the "Enron" example? Well first, John Abrams is right in discussing Enron as a perversion. Enron wasn't an ESOP, it was a 401(k) plan where individuals could buy Enron stock as an alternate investment and it was a fraud. Second, most of the lost money was "Madoff profits"--money folks thought they had made on the run-up rather than actual invested money. Finally, ESOPs create some great employee-owned companies. Some, like Carris Reels, are more "coop"-like and some are more conventional. Some share wealth and governance more broadly and some start out primarily tax-driven for the seller. Nevertheless, they are all part of a potential transition to workplaces that create more dignity, involvement and reward for working people and should be honored on that basis. Greensaw, not surprisingly from what I've learned of them, is simply on the leading edge of this movement in its transition to a worker cooperative.

posted by Brendan Jones @ 6:20 AM 0 comments

Wednesday, January 12, 2011

Second-guessing the co-op

I guess it would be a red flag if Beeg, among others, didn’t immediately take issue with the pragmatism of an employee-owned co-op. Sure, you can pull it off in the talcum-white bell jar of Martha’s Vineyard, the mountains of New Hampshire, the hills of San Francisco. But Philly? C’mon man. Built on the shoulders of industry, proud of how far we stray from the actual meaning of our Greek name (City of Brotherly Love), this a city of grit, of the last man standing. If you don’t know the time, don’t bother asking. Just get a goddamn watch.
Nope, ain’t nothin' cooperative going on around here, buddy. Leave the collectives to the Puritans up in Boston, the co-ops to the hippies on the west coast. We’re here in the 215 doing what we do best: living in a dirty city, protecting ourselves from the police, trying not to get parking tickets.
And ESOPs? Well, we all saw how that worked with Enron.

If you ever find yourself considering starting a business in a city that charges a “business privilege” tax, you’re crazy. If you can negotiate this craziness with the help of meds/yoga/drugs what have you, then I counsel you to employ the services of Terence Buckley aka. Beeg. He just about kicks ass, slicing through the bureaucratic and seemingly impenetrable scar tissue that has enveloped City Hall. He’s also a cynic. As T.S. Eliott avows, a cynic is just a hurt romantic. I could flesh this out further, but not without Beeg, a bottle of bourbon, and his consent.
In any case he keeps an eye on the ticks and chiggers crawling in the fur of the dirty underbelly of any creature we wake up. One of his remarkable and valuable skills is coming up with hypothetical situations where we could get put in a tough situation – and thus looking out for our best interest.
“This took me five minutes to think of – it might take them seven. Yeah, you want to set up a co-op and head out to Alaska? Why don’t you go ahead fuck yourself while you're at it? Yeah -- go out to Alaska, sleep with the polar bears, have a wild affair with an Inuit, freeze your nuts off, and while you're at it, go fuck yourself. Yeah, we’ll buy your tools, we’ll even take your truck, but paying shares for your company, when you’re not gonna even be around? You shitting me? We’ll just start our own goddamn company.”
You see what I mean, both about Beeg, and about Philly. He comes up with worst-case scenario thought experiments, expressed in a disturbing and profane vernacular.
Except here’s the thing: it’s not working out that way. Even for Beeg, who, fascinated with the concept of starting Philadelphia’s first employee-owned co-op, has been generous with his time and expertise. And not for anyone at Greensaw.
We have scheduled, for the weekend of January 28th, a retreat in northern Pennsylvania. There we will don our powdered wigs (a gesture of the Romantic age in-and-of-itself, started by King Louis XIII when he was losing his hair) apply our beauty marks, and unleash our quills on what will become Philadelphia’s first employee-owned co-op constitution. Of course it would be even cooler if we could take a field trip ten blocks south to Independence Hall and have it all go down there as the Japanese tourists snap pics -- but I’m not sure the National Park Service would be down.

Since we mentioned it let’s take a closer look at Enron. As John Abrams observes, not hyperbolically, “the Enron debacle and others like it are only the terrible perversion of a good thing, like rape is to sex.” There you have it.
At Enron thousands of employees lost $1.3 billion set aside in 401ks. In fact, only a very few had any say in the direction of company – which worked to the advantage of those in charge. These people at the top overstated earnings, encouraging employees to invest further into a company that was already tanking. They then, brilliantly, transferred the maintenance of the 401ks to a separate company, which required the money to be frozen for a month’s time. During this month they sold off their own stocks, made a killing, while ordinary Americans got the shaft, as did the reputation of ESOPS.
So much for that.
As far as co-ops go, there is no question that the entire structure has its foundation in trust. As John Abrams pointed out in an email, the owners at South Mountain, while he was down in Boston taking care of his wife, could very well have voted him out of the company.
“But they won’t,” he wrote.
From whence this trust?
It reminds me, if you can forgive the stretch, of the (near) penultimate line of Jonathan Franzen’s very good book “Freedom.” Spoiler alert, if you have intentions of reading it.
The book tells the story of Walter and Patty Berglund, and their two children. Patty cheats on Walter with his best friend, the transgression is discovered, a separation ensues. Walter goes to live in the wilds of Minnesota, while Patty does her best to cope, but mourns. After six years, she goes up to Minnesota, and sits on in the cold on Walter’s porch, until she is just about dead of hypothermia. Furious, he takes her in, they undress, and he curls up behind her to save her life. Full of rage, anxious for her life, mildly narrow-minded to start, Walter can’t figure out what to do. Patty, intuitively feeling his unease, whispers, “It’s me. It’s just me.”
Rest areas, birthdays, missed birthdays, scraped knees, dead cats, cracks in the plaster, victorious dinners, undercooked meals underpin both simple assertions. I mean life histories. These lines are signifiers to entire existences, over the course of which trust has been built.
And this – this is what sets us apart. Tenuous, yes. Adamantium-strong, yes. A living, walking paradox? Yes. Something to put my life’s work in the hands of?
Yes.

posted by Brendan Jones @ 5:10 PM 0 comments

Friday, January 7, 2011

Learning to Fly the Co-op

Take my word – you see a person’s true colors in a paintball war – specifically on the Old West course in Jim Thorpe, Pennsylvania. An abandoned movie set of a saloon, bank, forge, and post office provided cover as we Greensaw folks selected our positions. The start gun went off and suddenly we had guys blazing away in the street, some seeking cover, others picking off opponents from the saloon porch, others creeping around the periphery looking for a pot-shot. Not an easy thing, paintball. Especially when your goggles get fogged and you can’t see shit.
Thank the Lord above for folks like John Abrams, Alex Moss, Tedd Benson, and Melissa Hoover. I’m not sure if any of these folks have ever actually picked up a paintball gun. I wonder if paintball is even legal on that exquisite bell-jar of an island, Martha’s Vineyard, where John works. But I have a very good sense of how these leaders might conduct themselves on that Old West course in Jim Thorpe.
We at Greensaw have made the decision to follow in the footsteps of these visionaries, and, with their help and advice, become an employee-owned co-op. At the suggestion of a few, and also to follow in the footsteps of Abrams and Benson, I have committed to recording this process. Let me be clear – I have no aim of writing a book on how co-ops will make the world a better place. For one thing, John has already done this. I simply want to document and honor our process as we embark on this fraught but exciting journey. As Mr. Moss mentioned in an email, it's going to be a "wild ride."

To call ourselves trailblazers would be an overstatement. Perhaps trailblazers in the city of Philadelphia, but hell, we in the 215 haven’t even grasped the concept that citizens don’t pay taxes in order to be harassed daily by a parking authority. Although, with folks like Karen Randall at the Department of Commerce in Philly these things might change (a quick shout-out to her and the remarkable and awesome work she does).
There is a way forward there, and it has been marked, but it’s no stroll on the Wissahickon bridal path. Snow fills footsteps, thread tied to branches is gathered by nesting birds, handwritten notes bleed in the rain. Well that’s not entirely true – Abrams left a long note in the form of his book “The Companies We Keep,” and it has been a hugely helpful signpost, if not an outright bible. So there is a way forward – our goggles are not fogged, just hazy.

We first considered flying the co-op in November 2010. The process began with a question: how in tarnation to recognize the blood Greensaw employees have bled for the company? I mean let’s call it like it is: folks working here could take their skills to South Jersey or California and be making close to twice as much building high-end developments. Or working in an architecture firm. With the skill, professional acumen, and background employees bring and have gained at the company, they could be better-compensated elsewhere.
So what’s holding them back? Or formulated positively, why does a graduate of architecture school in her thirties choose to stay late in the office working on scheduling labor for the months to come? The answer, I don’t think, is a) she’s wants to stay warm (we have one space heater in the office – soon to be corrected with a move to our new offices – so no) b) she doesn’t want to go home (she’s got a great husband who happens to be a project manager at Greensaw and makes a damn good pomegranate martini – so no) c) she takes pride, and believes in what she does.
C, I do believe.
It’s no secret that employees, when they first start, get thrown into the fire just to see what happens. We put ‘em on a bus to New York, give an address for a jobsite and watch it like a spectator sport. Set them to cleaning up the fire set after the Phillies won the pennant. It’s something I learned from Tedd Benson at Bensonwood when they put me in the sawdust room with the chip augur for three days with no lights or windows to fix the motor mount – and don’t come out until you do.
So we have this – commitment to the work at hand. People aren’t playing paintball for just the fun of it. They’re playing because they believe in the larger goal at hand – to win the Wild West.

Second goal of the new model – I wanted to share managerial duties, and allow myself more freedom. To take advantage, for example, of the opportunity to buy a tugboat in Alaska and have the company come west to spread the good word on building with what already exists.

On the one hand, I could have just sold the company. Have it valued independently and either hire a head-hunter, or continue talks with folks who had already expressed interest. We did over a million dollars in gross revenue in 2010. It wouldn’t have been the hardest sell. The problem with that being that anyone buying us would very quickly dilute what has grown to be at best a family, at worst a cult (although cults can get pretty fun in the wee hours of the morn, as any dilly-dallyers at our parties witness).
What about choosing a couple central players, and selling them a share of the company, in return for taking on management?
This model had legs, and we investigated it. Capitalization, internal tensions, separation of site-work from office-work, resentment of me holding on to a percentage of a company I wouldn’t run on a daily basis – these questions made the choice problematic.
Yet the idea of empowering a choice number of individuals revealed an extraordinary truth about the company: not one person who has darkened our doors and made it through the gauntlet of the Greensaw hiring process and three-month review and come out the other side would be ill-suited to making decisions on the future of the company. Meaning that each person we hire gives a damn. Not only about Greensaw, but about how they treat others, the clothes they wear, the food they eat – and the work they do. And the more we thought about it, the more it became clear that this – this is the yeast that makes a co-op rise. Giving a damn about your every move on the face of this fine earth – or stated less crudely, speaking, working, eating, moving, living with intention.

First we looked into ESOPs – Employee Stock Option Plans. An interesting model, where employees own stock in the company where they work. Great idea, members don’t have as much of a voice in government, although different ESOP models work differently (I’m thinking of Carris Reels, essentially an ESOP co-op, on one side of the scale, and Enron on the other - whoops).
Aside from all these concrete reasons why an ESOP might not be the best fit, it also came down to personality. Give me Maine or Alaska, I’ll take Alaska any day of the week. Give me setting up a Christmas tree with a stand for the holiday party, or stringing it up with a come-along across the entrance horizontally – and I’ll choose the come-along. It comes from a muttish family that went on the ill-fated Klondike gold rush, has roots in Oregon and Greenville, South Carolina, suffered the loss of three brothers on the Confederate side in one Civil War battle, fled the pogroms in the Ukraine – and combine that with a kid who grew up roaming up and down city alleys on a Big Wheel reading Rilke’s “Letters to a Young Poet.” At a very young age, “Trust in what is difficult” became an obsession. This mantra has screwed me many times, often in quick succession, but it has never proved a dull.
ESOPs are co-ops Lite. There are a good 12,000 ESOPS across the US – but less than a thousand co-ops. It’s been done before, and it’s cool and all, but not as cool as a co-op.
And I do believe the guys and gals who make up Greensaw have always been up for the challenge in trusting what is difficult, what hasn’t been done. Often to a fault. Don’t take my word for it – come out and play paintball with us, or check out Friday Night Green Fights, or Sunday football. But especially paintball. I started that thought and I’ll end with it – but first I want to record where we are now.

Before the holidays, we formed the Founders’ Committee, whose ordained mission was to investigate and devise a set of bylaws and operating procedures for the co-op (I had just finished the "John Adams" series and visited Jefferson’s Monticello in Virginia. I advocated for us all wearing wigs and talcum powder but people said no – except for Dave, who took it to the next level with mascara).
As is usual with us, we were putting the cart before the horse in order to make the horse uncomfortable with the order of things and get him moving to where he should be.
At that first meeting we began to wrap our heads around the organizational structure of the co-op. Concerns were raised over how much power a management and personnel committee would have over the company. Also over how much individuals would be liable if the company went into debt. We resolved to look into these questions.
Christmas, the New Year. I bought five copies of “The Companies We Keep” and told folks that, like Eric Clapton who wouldn’t speak to anyone not familiar with the Blues of Robert Johnson, I wouldn’t talk to anyone about co-ops who was unfamiliar with the work of John Abrams. I should mention that John Abrams, in his friendly, clear manner, made it evident that he had no interest in discussing co-ops at length with me until I did my homework and read what he had already taken the time to express in his book. Point noted and taken.
We returned following our break and had our first meeting yesterday. Terence Buckley, our financial guru, attended. He made it clear that individuals, unless they committed fraud, would not be liable for company debt. We determined that the board of owners would vote in a management committee – and we would organize ourselves in such a way to guard against cabals.
Heath asked if he had any experience with co-ops. In true Terence fashion, he responded, “No, is that a problem for you motherf—r?” Undoubtedly, this is going to be a Philadelphia co-op, albeit the city’s first, and not a Martha’s Vineyard co-op.
What has been incredible about this process is the interest people have expressed in wrapping their heads around the process. I have come to realize, thanks to the inspired help and guidance of Alex Moss at Praxis Consulting in Chestnut Hill, that the process by which we choose owners should be a spiral one, and not a selective one. In other words, cast a wide net, see who expresses interest, and narrow things down from there. As always, everything depends on team. And a team has the ability to self-select.
I should mention that I spoke with Alex at his offices in Chestnut Hill, and shared lunch with him. He has been kind enough to do work pro-bono in order to help us get on our feet. His deep knowledge, cool head, and devotion to the co-op model is inspiring. To have someone alongside us, his Virgil to our Dante (except we’re not going down into the multiple circles of Hell), is invaluable and hugely appreciated.
And that’s essentially where we are now. We have a meeting scheduled with Jim Steiker on Wednesday to help us wrap our heads around what needs to happen legally for this all to take place. We will need to get the company valued, figure out the cost of membership shares, devise methods of payment both for dividends as well as for the buyout, and sign on to birth the new Greensaw Design & Build Co-op.

So there you are, huddled on the roof of the bank, green blue and pink paintballs whizzing around at 240 feet a second left, right and almost center. You’ve got Melissa, John, Tedd and Alex by your side – the kings and queens of the co-op. How would they play this game?
I’ll tell you how. They would come out blazing. I’m not talking about you cover me or I’ll cover you or let’s coordinate – I’m talking about stepping into the midway Clint Eastwood style and taking folks out. Which, paradoxically, is why the co-op model works so well. It allows these gunners - and that's what they are - the space to shoot from the hip, to be dreamers, to go blazing away and see what sticks.
Or not. The collective makes it clear, as a whole, when the time is for blazing, and when the time is for taking cover and waiting, playing defensively. I never last in paintball. As I wrote in a previous blog, I’ll take a teammates’ gun with the promise to give it back, then I won’t give it back. I’m awful. Abraham Lincoln says that every man can weather adversity, but give him power, and you know what sort of character you’ve got.
Here we are collectively, hunkered down, our hoppers brimming, our goggles clear, our hearts full. We can’t lose.

Labels: Architectural salvage, co-op, Coop, green builders

posted by Brendan Jones @ 10:53 AM 0 comments

A blog addressing the importance of re-using material, and building with existing structures. A strong emphasis on architectural salvage, as well as the people that make the difficult work possible.

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