Today we announcе that ShapeBlue is now a 100% employee-owned business: owned by all of its employees, for the benefit of all of those employees.
I will continue as full-time CEO, and am excited to do so, but am no longer a shareholder in the business. The business is now legally owned by a trust that has been set up to act in the best interests of all ShapeBlue staff.
In this article, I want to explain the rationale for this decision and how I think it will help ShapeBlue continue to develop and protect our ongoing mission.
I founded ShapeBlue in early 2012, and we quite quickly built a reputation as the go-to organisation for anybody running or considering running, Apache CloudStack. We help many organisations leverage massive value from the open-source platform.
From the early days, it became clear that ShapeBlue was not going to be like the organisations that I’d previously run. Yes, our mission as a commercial business was to ensure that our customers got maximum value from our services, but we also had a mission to help develop the open-source technology that we’d built the business around: Apache CloudStack. That meant that our team was going to constantly collaborate within the governance model of an Apache project, where the usual management rules do not apply. We needed to develop an internal company structure that reflected that environment, so the business has been built with an open-source ethos: based around values of empowerment and responsibility for all team members.
Commercially Successful but Growing Responsibilities
On the commercial side, ShapeBlue has been very successful. We work closely with a number of the world’s largest companies and hundreds of other organisations who have all gained huge value from Apache CloudStack and, I hope, from our services. On the financial side, we have grown every year since I founded the company, have always been profitable, and our projections see that continuing, certainly as far as I can see into the future. That steady, organic, growth has meant that we have not had to raise external funding at any stage following the initial seed investment.
The company’s responsibilities, however, have grown. Yes, like any other services company we have the standard responsibilities: to our customers and our employees but in addition to this we now have an overriding responsibility to maintain our involvement in Apache CloudStack. Our team is now almost exclusively made up of “open-source people” and nearly all committers in the Apache CloudStack project. We now have a responsibility to continue with our existing business and commercial models.
The Usual Path
Tech businesses of our size usually do one of 2 things as they enter this phase of their development: they IPO or they get acquired. We are relatively small and stable and have no need for immediate cash injections, so IPO is not a fit for us.
It is no secret here that we’ve had many acquisition approaches over the years: many of them very serious offers. One of the many things that I asked every potential suitor was “how would you protect our company’s mission around Apache CloudStack” –none of them were able to satisfy me on this. Without protecting that mission, there is no way that ShapeBlue would be able to continue to deliver, long-term, for our customers and fulfil the ambitions of our team members.
I began to realise that the only way we could fully protect our mission was to remain an independent business: it is the team here at ShapeBlue who define who we are and what we do. But was it fair that the ongoing ownership of the company remained predominantly with a single shareholder? – if I’m asking people to help maintain our mission into the future, they should be able to share in the benefits of that future.
Employee Ownership – a new model of company ownership
I first learnt of the concept of Employee Ownership when reading about the successful transition of Richer Sounds . They are a UK-based retailer, has always outperformed their competitors and are greatly admired due to their incredible customer service. Their founder wished to protect that mission and culture as he reached the latter stages of his career. I’m not at that stage, but I started to think about whether such a structure could be applied here. I explored other companies that had adopted employee ownership, and it was like I’d opened the wardrobe into Narnia. As well as the sheer number of successful employee-owned businesses, I quickly realised a number of things:
- The Employee ownership model wasn’t some weird abstract thing only used by farming co-ops. Many very successful, prominent businesses had adopted this model as a foundation for their ongoing growth (List of employee-owned companies – Wikipedia)
- Employee ownership doesn’t have to mean that organisations are run by some form of committee (although that is possible) – most employee-owned companies have very strong leadership driving them forward: companies need leadership. The business still needs to perform to all the usual standards – but what changes is that the purpose of the business moves from “delivering shareholder value” to “delivering employee value”
- Nearly all employee-owned businesses were more successful than their traditionally owned peers. They all report increases in morale, team engagement, customer retention and overall productivity after moving to the model
Our Journey & New Structure
We first started discussing this as a potential route for ShapeBlue about a year ago. Over that year, we have engaged with dozens of similar organisations to learn from their experience and had excellent advice from the Employee Ownership Association. We spent months planning and discussing before bringing in advisors and finally completed on our Employee Ownership in late August 2022.
We have set up a trust (The ShapeBlue Employee Ownership Trust), and the existing Shareholders have sold 100% of the equity of ShapeBlue to that trust. The beneficiaries of that trust are all the employees of the company. The trust is governed by 5 trustees: 2 from our leadership team (including myself), 2 employee trustees and an independent trustee to bring an outside view. The trust will provide mainly a governance role to ensure that the company is being run in the best interests of its beneficiaries: all our staff. We are currently in the process of codifying the process for the election of our employee trustees.
This structure means that major changes to the structure of the company cannot happen without the full support of our employees. We’ve always been a company that does “staff engagement” well – that has now been legally codified.
The board of the company remains unchanged: with me continuing as CEO. Our growth & technical strategies, service offerings and day-to-day operations remain unchanged – becoming employee-owned do not affect our mission or ambitions as a company. It does, however, change our overall purpose – we are no longer a company that’s ultimate purpose is to make gains for a small group of shareholders. The ultimate power and value in this business have shifted from its shareholders into the hands of the people who generate that value: its employees.
After announcing this internally I was asked a question by one of the team: “so, what’s actually changed, Giles?”. My reply was simple “nothing has changed, and everything has changed”.
Giles Sirett is the Founder and CEO of ShapeBlue, the CloudStack company.