•Employee-owned cooperative: after a one-year “candidacy” period, long-term employees have the opportunity to become a “Co-Owner” by buying one share of voting common stock (i.e. 1 person, 1 share, 1 vote).
•“Extreme transparency” and open-book management.
•Certified B Corp and “Best for the World” awardee (2012-2014).
•Environmental stewardship: solar-powered and LEED-certified office buildings, free bus passes for all employees, plug-in hybrid car fleet, and “near-zero” waste operations.
•Community giving: 20 percent of annual net income after external investor dividends goes to the “community” stakeholder, or local non-profits, totaling over $850K since 2005.
•Values-aligned pay structure: no sales commissions, no individualized bonuses (all Co-Owners receive the same dividend), maximum 6-to-1 cap on highest-to-lowest total pay, and Co-Owners receive six weeks of paid time-off per year.
•Namasté MBA: effort to share the entire experience of small business ownership and increase the financial literacy of Co-Owners.
•Flexible work environment.
Can you tell us the story of starting Namasté Solar?
Blake Jones: In 2004, I returned home to Colorado after working for three years with solar electricity in Nepal. My co-founders, Ray Tuomey and Wes Kennedy, and I discovered that we all shared a common vision for starting a company that would help prove that there’s a better way to do business than the conventional norm. We wanted an employee-owned, transparent, and democratic workplace whose purpose was to benefit all of the company’s stakeholders, not just its stockholders. While living in Nepal, I had been using the word “namasté” on a daily basis as a greeting of great respect, and Wes used it regularly as a yoga practitioner. We interpreted its meaning as “recognizing the interdependence of all things,” such as employee morale and the bottom line, energy policy and the economy, public health and the environment, etc. We thought this meaning was a perfect fit for our company name, and that led to Namasté Solar being officially incorporated on February 2, 2005.
One of the scariest times for entrepreneurs is actually making the decision to jump in. What did this decision look like for you?
BJ: It was indeed a scary decision. For most of my life, I had never even considered the possibility of becoming an entrepreneur. When my wife and I lived in Nepal, I worked for a renewable energy company where I learned about the challenges of small business management. During a particularly trying period, I remember telling my wife, “Wow, running a small business is really tough – please don’t ever let me start one!” Even as Namasté Solar was getting launched, I couldn’t believe what we were doing – and neither could my wife, who reminded me what I had said just a few years earlier in Nepal – but our passion and excitement for our vision pushed us over the edge into the scary unknown, and that’s been the fuel that has sustained us ever since.
“Our passion and excitement for our vision pushed us over the edge into the scary unknown, and that’s been the fuel that has sustained us ever since.”
What inspired Namasté Solar to become an employee-owned co-op?
BJ: When we started the company, we were naïve, first-time entrepreneurs, and to put it plainly, we were simply unaware of the cooperative model. Instead, we invented our own wheel, so to speak, by creating our own customized employee-ownership structure. Interestingly enough, it was similar to a cooperative structure because we made many big picture decisions democratically on a one-vote-per-person basis. However, we also allowed all long-term employees to purchase as much stock in the company as they wanted. This resulted in increasingly varied levels of stock ownership, which in turn resulted in early Co-Owners having more stockholder-level control than those who joined later, which was not what we had intended.
So, on January 1, 2011, our approximately fifty Co-Owners voted to convert to an employee-owned cooperative, and we couldn’t be happier with that decision. The cooperative model more closely matches our democratic ideals and more equitably distributes the risk-reward equation and small business ownership experience for our Co-Owners. Lastly, as part of our transition to a cooperative model, we created two classes of stock: a class of cooperative voting stock, of which only employees could own a single share, and a class of non-voting preferred stock. The preferred stock enabled us to start accepting external investors without compromising our cooperative model or democratic employee control.
What have been the biggest challenges of being a co-op and how have you addressed these challenges?
BJ: Our biggest challenge by far has been fast growth, both internally at our company and also externally in the solar market. We found ourselves getting swept away by the booming solar market, which we call the “solar coaster,” and we unintentionally doubled in size every year for our first five to six years. With our unique business model, we had no blueprints to follow, and trying to scale the model so quickly put a lot of strain on both it and us. We had to learn how to embrace change and evolve our unique business practices very quickly.
Sometimes it felt like we were continually having to make painful compromises between our original vision for the company on the one hand, and growth and scale and external market realities on the other. For example, we actually started the company based on consensus decision-making, but as we grew to over forty people, we had to transition to democratic decision-making, which has worked well with now over a hundred of us. When we were small, we held votes on a one-vote-per-person basis for just about everything, but as we scaled up we transitioned to more representational forms of democracy with more empowerment votes for individuals, teams, committees, etc. I remember getting some very helpful advice from one of our employee-owned company role models, New Belgium Brewing, based nearby in Fort Collins, about trying to distinguish between the “principle” and the “practice.” You want to keep your principles intact as you grow, of course, but you might need to change the way that you practice the principle or act on it. This paradigm has been very helpful.
“You simply can’t try new things or be truly innovative without a willingness to fail or make mistakes.”
What unexpected value has resulted from structuring the business as a co-op?
BJ: One enormous benefit of being employee-owned is that everyone thinks and acts like an owner. This directly translates into better work quality and better customer service, but I guess this was a benefit that we had both intended and expected.
Some unexpected benefits stemmed from the cooperative model being more prevalent and well-known than we had realized, and this, in turn, helped us to better communicate who we are and to raise external capital more easily than we predicted. Previously, it could be challenging for us to describe our unique, customized, employee-ownership structure. We would say we were employee-owned and here’s how it works, and here’s what that means, but simply saying we’re a cooperative usually registers with people instantly. A good analogy is that I can give you a tour of our building and show you all of its energy-saving and progressive design characteristics, or I can just tell you that it’s LEED Gold certified, and boom, you get the idea more quickly. Another analogy is that we can now say that we’re a certified B Corp, which helps us take a shortcut in telling you that our company has a measurable, positive impact on society and the environment.
As an aside, we really like being a cooperative and a B Corp, and having LEED certification, because it allows us to contribute to all three of those important movements. Lastly, in terms of raising money from external investors, we have been pleasantly surprised at how many people specifically want to invest in a conscientious, democratic, cooperative model like ours. In 2012-2013, we raised about $750,000 from 25 values-aligned, external investors. We were even oversubscribed and had a wait list. The interest and support that we received was far greater than we could have imagined.
What role do you see solar playing in the energy industry 20 years from now?
BJ: In 20 years, I think that solar panels will be a more common sight on rooftops than chimneys, satellite dishes, or TV antennas ever were. People who can’t put solar panels on their own roof will have the option to participate in a “community solar” project the same way they can grow vegetables at a nearby community garden. The cost of solar will keep coming down and the technology will keep getting better – and not just for solar, but also for storing energy and managing a grid that has multiple distributed generation sources of different types like wind, solar, fuel cells, etc. 20 years from now, I want a more balanced energy portfolio, just like I want a well-balanced retirement and savings portfolio. Right now, it’s too concentrated with fossil fuels. Instead, we’ll have a diversified energy portfolio that still has some conventional energy, but also lots of renewable energy, and solar will be a big and ever-growing part of it.
What policies are hindering solar development and what policy changes are needed to promote solar development?
BJ: There’s a policy called “net metering” that is in place in almost all 50 states that has been the foundation for solar development in the US for the past ten years. Unfortunately, this policy is under attack by many utilities, and it is critically important that we maintain net metering in order to continue the healthy growth of the solar market. How does net metering work? Well, when a solar system is on the roof of a hospital, for example, it first goes towards meeting the immediate power needs of the hospital building. If the building doesn’t need the electricity, it gets exported to the utility grid and gets used by a neighboring building. In this scenario, net metering allows for the utility meter to spin both backwards and forwards at the same retail rate.
Many utilities don’t like net metering, primarily because I think they feel threatened by the growing popularity and affordability of rooftop or distributed solar. Utilities claim that if a solar system owner produces as much electricity as they consume, then they aren’t paying their fair share of maintaining the utility grid. This is a valid perspective, but it’s also only one perspective out of many others, and it doesn’t come close to telling the whole story. Distributed solar also provides added value to the grid and the utility – not to mention the community and the environment and public health, etc. – by providing electricity production and voltage stabilization throughout the grid closer to where the electric loads are, which also prevents the need for costly grid infrastructure upgrades and eliminates efficiency losses via transmission lines. So, we need strong ongoing support for net metering policies nationwide.
Also, I’d personally like to see all subsidies for all forms of energy – both conventional and renewable – come to an end. That’s probably not going to happen, especially because oil, gas, coal, and nuclear subsidies are so firmly entrenched and are difficult for the public to see. But the good news is that solar costs have been plummeting for the past ten years and will continue to go down until we can finally wean solar off of government subsidies. I think this will happen within the next five years. In some places, like Hawaii and the sunny Southwest, it might happen earlier. When unsubsidized solar can compete against still-subsidized conventional energy, that’s when the real excitement will begin!
What insights do you have regarding quality conscious leadership and building an effective team?
BJ: At Namasté Solar, one of our core values is “distributed leadership.” We believe that leadership, in different forms and at different times, can and should come from all people and roles throughout our company. I have a plaque on my desk that sums it up nicely. It says, “No one of us is as smart as all of us.” When you combine distributed leadership, a democratic workplace, transparency, and employee-ownership, the end result is very powerful. It increases the chances that you find the optimal solution, that people synergize as a team, that everyone is engaged and committed, and that everyone thinks and acts like an owner. Over the last ten years, I’ve learned that democratic, collaborative, and distributed leadership has far more potential to build high-performing teams and organizations than traditional “command-and-control” leadership.
What have you learned from failure, either professionally or personally, that has helped you in your career?
BJ: I believe that failure and mistakes are critically important parts of learning and growing, both for an individual and an organization. It’s hard to accept failures, and I have to continually remind myself of this lesson, but you simply can’t try new things or be truly innovative without a willingness to fail or make mistakes. And you need more than willingness, of course. How does your company culture perceive and address mistakes? How do you learn from them? Are your colleagues scared of getting blamed for mistakes, or do they proactively expose them and ask for help in finding a solution?What’s next for Namasté Solar?
BJ: We’re continuing to grow and are expanding our services nationwide. This year we’re opening a third branch office in the Northeast and a fourth in the Southwest. We’re excited about the growth outlook, albeit nervous as well, and we hope that our past experience and our “Namasté MBA” will help us with the never-ending search for balance between mission, values, and culture on the one hand, and growth, change, and adaptability on the other.