Armin Steuernagel
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I own a company, and I have a problem. To be honest, I think we all have a problem. Because we all stopped discussing one of the most important questions. A question that affects all of us. A question people died for 100 years ago in revolutions. Private ownership or state ownership? Capitalism or communism? Who should control the institution that all of us spend most of our time in? Who should control our companies? Greedy capitalists or mindless bureaucrats? Or maybe, but just maybe, none of them? Many people say, "Fuck capitalism!" But, you know, should we "fuck capitalism"? (Laughter) And if so, how? (Laughter) At this point, I have to make a confession. I am a capitalist. I founded my first successful business when I was 16, and while my friends had girlfriends, I fell in love with my company. I love private ownership. You know, it gives you the power to shape the environment you live in. You have an idea at night, you can realize it the next day. You identify 100% with what you own. It's like having a child. You feel responsible for the company like a parent If the company is struggling or ill, you have to be there. You can't hide, you can't make excuses, and that is what's so great. (Laughter) That is what's so great about private ownership. It clearly defines who is responsible and accountable. Not nobody, not everybody, you as the owner. You are responsible and accountable for it. That is the big promise of ownership. But, I'm here today to tell you, this great idea of private ownership, it needs us. It is ill. This fascinating innovation, this history-changing idea that we, as humanity, had more than 2,000 years ago, it is in deep, deep trouble. It is misused against us, against us all, against humanity. And if we don't reclaim it, if we don't reconquer it, it will destroy our economy, our society, and maybe even our planet. So, please join me to understand the illness and find a cure to heal private ownership. Our first stop on this journey will be a hospital in eastern Germany. When I was young, I visited it a lot. My father was the director there. It used to be a great hospital. They had a wonderful warm atmosphere, happy employees, well-taken-care-of patients, organic food. And they made healthy profits. So, nothing that required a change. But in recent years, the ownership of the hospital was sold. Once, twice, three times, eventually four times to a public stock market company. And each investor paid a higher price to buy the hospital, and so each investor had to put more pressure on the hospital to increase profits, to earn back the high price they paid. They forced my father to outsource the kitchen to a low quality provider. They forced him to fire half of the doctors and cut the time they're allowed to spend per patient. Today, the place is filled with unhappy employees and frustrated patients. They're now part of a large corporation that manages 70,000 hospital beds, and they receive orders and directions from Paris, 2,000 kilometers away from the headquarters. So decisions are made by people who have literally never been to that hospital. They have no understanding of what is needed there. They don't know what it means when they order doctors to spend no more than five minutes for a first conversation with patients. These guys in Paris just know one thing. They have to produce better numbers. Otherwise, they get fired. And what really drives me crazy, we cannot blame them! They're not bad people! They eat organic food, etc. You know, these people are pressured by others, by stock markets, by anonymous shareholders, and to be more precise, by supercomputers and algorithms that do 99% of the trading on stock markets today, and sell, and buy ownership in nanoseconds. These people cannot behave like responsible owners. They're not allowed to identify with what they own. They control the business, but they're not connected to it. And the hospital of my father is just one example. It happens all over. Every day, hundreds of mission-driven companies get bought by large profit-driven corporations. And they all lose their caring stewards. They lose their parents. And they end up with ... with what? With absentee owners, with speculation owners. And this eating up of small companies by large corporations doesn't only create companies without parents. It also creates a centralized economy with fewer and fewer corporations. The US has lost, in this way, over the last 20 years, half of its corporations. So absentee ownership, it's not only poisoning our companies, it is the enemy of our decentralized market society. Now ladies and gentlemen, who are these absentee owners? Are these the rich? Are these the super rich? Are these large corporations? All wrong. Look at that. That is where investment capital on the stock markets comes from. 87% from insurances and pension funds. From you all and me. It's our money, that is the scandal. Just imagine that, we, western half-riches, we have created a system, a vicious circle that takes our money and uses it against us. You know, when I understood this, the scales fell from my eyes. You know, how is that possible? Private ownership, this great idea, has a double face. It can create responsibility, that's for sure. But at the same time, private ownership, as absentee ownership, can destroy responsibility. It can create an emptiness, a vacuum, a situation in which nobody feels responsible. That was a first tough stop on our journey. Let's move on. We've understood the illness, I would say. Let's look for the cure. What would a company look like that had true parents? A company we could really trust. And this guy, Ernst Abbe, the co-owner of Zeiss, found a way to do this for his company 130 years ago. Zeiss is a typical German hidden champion. A world market leader for microscopes, optics, with 70,000 employees. And none of our smartphones or laptops could be produced without Zeiss. So it's an important company. Ernst Abbe thought a lot about ownership when his co-owner passed away. He asked himself, "Have I created all this wealth? Is this all my work? I have not. My employees have done most of it. Even my invention of the microscope, was only possible due to many generations of scientists and researchers." So he wrote, and I quote now, "The law gives me the absolute right over this company. The law gives me the right to take everything. But I feel that is not right. It doesn't all belong to me. It also belongs to employees and society." So what did this man do? He realized there were no good legal forms of ownership that would reflect this thinking. He was an inventor, so he invented something. He used the legal form of a non-profit foundation, and then he donated the entire company to that foundation. So it's the first foundational company in the world. From that moment onwards, Zeiss has belonged to itself. No absentee owners can steer Zeiss from far away and push them to harm us. No hedge fund can come along and buy it, because it's not a tradable commodity anymore. Instead, there are skilled people who are steward owners for a certain time, you know, without a right to sell or inherit the company. And profits are either reinvested or donated. Their donations have financed several universities, and the entire city of Jena in Germany was basically upgraded by them. So this company exists now for more than 130 years, it has survived several political systems, and it is still highly successful. I recently visited it and employees told me "the company belongs to us." And the interesting thing is, they are intrinsically motivated, because they know they're not working for somebody else's private pocket, they are working for a purpose. So Ernst Abbe has found a cure to heal private ownership, and by this, he has redefined, he has revolutionized the way we understand company ownership. And the good news is, he's not alone. Many other companies have found the cure as well. The famous company Bosch, for example, is only owned by stewards. John Lewis Partnership made 70,000 employees steward owners. Rolex in Switzerland, Playmobil and Dr. Hauschka in Germany, and many, many others. I studied many of them. I visited them, conducted interviews, and what I found, they all follow two simple rules, the two rules of steward ownership. Or you could also say the two rules of decommodification of the company. So what are these two rules? The first rule is the rule of self-determination. The rule of self-determination says, make sure the company, or the control right of the company, is not a tradable commodity. I say it again because it's so important. Make sure the control over the company, or the company itself, is not a tradable commodity. That means, the company is not a thing. It's not a shoe that you can sell and buy. It's not a puppet of anonymous stock markets. But it is a being. It is a being that has stewards who are only stewards as long as they are connected to the mission to the company. They can't sell, they can't just pass it on to their children. So that's the first rule. The second rule is the rule of purpose. And the rule of purpose says, make sure profits are seen as a means. They're important, but they're a means to an end, not an end in itself. I'll repeat it, because that's an important rule. Profits are seen as a means to an end, and not an end in itself. That means, profits are mainly reinvested or donated. And this means these companies exist to create value for us, to solve problems in the world, not to make money. They exist for us. Now, these two rules are very simple. That's all, basically, what I have to give to you today. But they're super revolutionary at the same time. They are actually family business 2.0. Instead of giving your company to your blood relatives - you know, the lottery of sperm, etc. - instead of giving it to your blood relatives, you give the ownership of the company to value and ability relatives. You know, that means you make sure the company has parents and not speculation owners. So our journey has led us now to the solution. It is neither state ownership nor private ownership. But it is something new, or you could also say, it's something revolutionary, but quite old at the same time. It is just true private ownership, nothing more. Or to say it differently, it is steward ownership. A steward of a company is like a parent for a child. Now, let's not stop the journey here yet. Le's go on and understand how exactly can we realize this today. And of course, the state doesn't offer steward ownership as a legal form. Not yet. And so you have to find ownership hacks, you have to hack around it. That's what I did with my company. I put the two rules of steward ownership - I put them up again - I put them into the articles of association, into the constitution of my company. When a hedge fund comes along, they can obviously just give a lot of money, and you could change the rule. So to prevent this, we founded a foundation that holds a veto right, a golden share, and prevents changes to those rules. Now, when I made this public, you cannot believe how many employees and how many customers wrote me and told me it changes their relationship to our company completely. They're no longer instruments to make me rich. The company is truly there for them. When I talk about this with mainstream economists or mainstream lawyers, they often say, "Armin, come on, you are naive; this cannot work. You're turning off the engine of capitalism itself." And I am, yes. But, the good thing is ... (Laughter) the good thing is, many studies of hundreds of steward-owned companies prove these mainstream economists wrong. Studies show these steward-owned companies have a six times higher survival probability after 40 years. They live longer. And they're more profitable in the medium term and in the long term. Data shows customers trust them more, employees earn more, stay longer, and are more motivated. So steward ownership's actually better for our companies, and better for us all. It is the right cure to this poison of absentee ownership. And that's the reason why I got together with several other entrepreneurs to found the Purpose Foundation that helps other entrepreneurs to start and transform companies based on steward ownership. We also founded Ownership Transformation Investment Fund that helps steward-owned companies, and can buy companies off the market and make sure they never have absentee owners again, but only stewards. So let me conclude. We can obviously not just say, "fuck capitalism," but we can stop being puppets of absentee owners, of anonymous stock markets. We all know this feeling of powerlessness in face of a gigantic anonymous system, a wild animal that we call economy today. But, ladies and gentlemen, how can this wild animal have so many arms to harm us if we don't lend our arms to it? How can it have so many feet to trample on our economies and our environment if these were not our feet? How can it have any power over us if not through us? We can tame that animal. We can stop being puppets. We can, if we are unhappy in our workplaces, if you're a frustrated entrepreneur or a frustrated employee, we can get together with our colleagues, and you can make your absentee owner an offer to buy them out and reclaim your company. Let's not leave our companies and our economy to these wild animals, neither to greedy capitalists nor mindless bureaucrats. Let's reclaim it. Let's reconquer it. Let's become true stewards of our economy. Not for profit, but for purpose. Thank you. (Applause) (Cheers)