Village Labs

Hello YC community & world,

It’s an exciting time! Turja and I are building Village Labs, a new firm that helps businesses become employee-owned by helping them set up and manage an employee stock ownership plan (ESOP).

ESOPs are federal retirement plans that enable companies to give their employees shares in the business in exchange for major tax benefits. They are NOT stock option plans, and no, we are NOT doing cap table management!

EMPLOYEE OWNERSHIP WILL BE BIG
There are currently about 6,000 companies with an ESOP across the country — the popular names include Publix Supermarkets, Harpoon Brewery, and Recology (the maker of those black, blue, and green trash bins you see on every street in SF).

Employee ownership has been around for decades in America, but there’s going to be an explosion in the number of employee-owned businesses that are created in the next few years. There are a couple of reasons for this:

1. The Silver Tsunami: 2.9M Baby Boomer business owners are going to sell their businesses in the next few years. Many of them will sell to their employees because they get a fair price, tax benefits, and the comfort of knowing their employees will be taken care of - things not guaranteed by traditional buyers like private equity.
2. Government support: Congress and state legislatures are passing more legislation to encourage the creation of ESOPs. This largely looks like more tax benefits for ESOP businesses and owners who sell to an ESOP.
3. Mainstream awareness: There’s been a surge in awareness of employee ownership in the last few years because of new press coverage. See: Pete Stavros on 60 Minutes, Blackstone announcing its employee ownership initiative, major businesses announcing becoming employee owned.

WHAT IS VILLAGE LABS DOING?
At Village Labs, we’re setting out to help create as many employee-owned businesses as possible. In terms of what we do, we help owners sell to their employees via an ESOP and then provide them with the tools they need to manage their plans.

HOW YOU CAN HELP
Most business owners don’t know that selling to their employees is an option (and one that commonly comes with the most financial benefits). We’re working to change that by building a nationwide network of partners with close connections to the many Boomer business owners who will retire soon. We work with these partners to educate owners on selling to their employees.

If you’d like to help, you could introduce us to…

• Owners and executives at mid-sized businesses with 20+ employees and stable cash flows
• Business brokerage firms (e.g. Transworld, Sunbelt Brokers, etc.)
• Exit/estate planning firms + wealth managers

And if you happen to be one of these, we’d love to talk to you.

WHY WE’RE EXCITED ABOUT EMPLOYEE OWNERSHIP
The short answer is that being employee-owned is just a better way of doing business.

Here’s the story of CHI Overhead Doors, a garage door manufacturer in rural Illinois. They’re not an ESOP, but their story highlights what makes employee ownership so awesome.

This isn’t an isolated, one-off thing. There are many stories out there of businesses that benefited from becoming employee-owned - and we’ve seen them personally. Turja and I have been on the road for a lot of YC this summer, visiting employee-owned businesses in places like Portland, Tuscon, and other cities across the country. One of the main things you notice is that the employees are noticeably happier, and the quality of service is excellent - likely because the employees have ownership in the business and, therefore, an incentive to see it succeed. It’s the same reason we, as founders, give shares to our employees.

Considering 70% of Americans don’t like their jobs, and ~50% have no retirement savings, we think widespread employee ownership would bring those numbers down. That’s why our goal is to create as many employee-owned businesses as possible. That means more people who enjoy their jobs, more retirement savings, and a more productive economy.

Again, most people don’t know that employee ownership is a thing, but wouldn’t we all be better off if they did? If you’d like to help us with this or are just curious to learn more, please do reach out!

Thanks for reading!

-Roger & Turja