• Christoph Bietz: Hi Astrid, nice to meet you, at least digitally here in our Zoom room. Since I haven't been with Purpose for long, I'd like to start by asking: What do you associate with us and the concept of Steward-Ownership? 

Astrid Scholz: I'm trying to remember how we were introduced to each other. It was early 2017, shortly after we wrote "Zebras Fix What Unicorns Break," which was essentially a critique of unicorn culture and the Silicon Valley narrative. This critique came from the perspective of founders who couldn't identify with these financing structures, cultural norms, and company structures. When we learned about Purpose, it immediately made sense that there was an alternative way for companies to be structured and positioned for the long term. So, I would see Zebras and Purpose as closely related.

 

"Zebras are real, unlike unicorns"

 

Christoph Bietz: From your perspective, are there certain similarities or commonalities between the Zebra movement and Purpose?

 

Astrid Scholz: The Zebra movement describes a holistic approach to long-term business development. It's about companies that fit into the 21st century. Many founders and investors who find this narrative appealing are also interested in new forms of company governance. I just had a conversation with a group of investors about different forms of "community ownership" and purpose-driven companies. And in a broader sense, steward-ownership also falls into this category.

Christoph Bietz: Could you provide a brief summary of what the Zebra movement is about?

 

Astrid Scholz: Zebras, unlike unicorns, are real—right? They are black and white. They balance purpose and profit. They are resilient. They forge their own path. They collaborate; they are herd animals. In business terms, this means they build ambitious, long-term-oriented companies that always keep the community in mind. They don't sell themselves out for venture capital. In essence, venture capital is wrong for the majority of companies that are founded. So, we describe an alternative path for founders, alternative investment models, and alternative business models to bring these ambitious visions to life.

 

"Venture capital is vanilla, and bank loans are chocolate, but what we need is a variety of capital forms"

 

Christoph Bietz: If venture capital doesn't work for many companies, what would be the right term for someone who supports Zebras financially?

 

Astrid Scholz (laughs): Are you suggesting a different term than Zebra investor? Well, our work aims to explore new forms and sources of capital because there's much more to the spectrum of capital flows than just venture capital or bank loans. So, how do you describe that vast middle ground where 85 percent of companies, which are currently not served by venture capital or banks, reside? And what types of capital do they need? Venture capital is vanilla, and bank loans are chocolate—what other ice cream flavor would you like?

 

We simply need a variety of capital forms. One term that appeals to me is Responsive Capital. Responsive in terms of the company and the entrepreneurs. Responsive capital also means responsible capital, regenerative capital, resilient capital. In contrast, venture capital is a very limited and constraining asset class, following a "one size fits all" mentality. Responsive capital means that capital can respond to the specific needs of the company at any time.

 

Christoph Bietz: Why should investors be interested in providing alternative forms of capital, like responsive capital, for example?

 

Astrid Scholz: Simply because I think they will understand it. And there are various reasons why they should be interested. One of them is that they might philosophically believe it's right to help build a form of company that isn't available for speculation. It could also be that they operate in sectors where many impact investors are active, and these investors are interested in emerging markets. Venture capital plays a limited role when it comes to supporting such companies. Additionally, I believe some people are just innovative. They like to be pioneers and are fascinated by revenue-based models. These models are also a good choice! Because liquidity is achieved more quickly, similar to a dividend on a stock, and I think that's attractive to investors in these times.

"The bubble is an attention bubble"

 

Christoph Bietz: It sounds like these times might be changing. However, at Purpose, we often face questions like: Aren't you living in a bubble if you genuinely believe that profits are not the ultimate purpose but merely a means to an end, primarily serving the mission and purpose of the company? What would you say?

 

Astrid Scholz: It's always a great pleasure for me to draw people's attention to your case studies and make it clear to them: Here are all these long-standing, enduring companies that embody these ideas, and there are many more of them than you would think because they often go unnoticed in the mainstream. You may not be familiar with cooperatives; you may not be familiar with steward-ownership, but it exists everywhere. And these descriptions apply to some very well-known brands and names. Usually, at this point, people's eyes widen, and they say, "Wow, I had no idea this even existed." That's the point. The bubble is an attention bubble because venture capital has garnered so much attention and dominated the narrative. That's why part of our work with Zebras is to create a new narrative. And that attracts people because it's a sexy brand. So, all we've done is find a sexy name for the things you and others have been working on. And to say, "Look, here's a charismatic view of this alternative way of shaping the world."

 

Christoph Bietz: Thank you, Astrid. I somehow like the perspective that it's not us but the venture capitalists who are living in a bubble. Just as a concluding remark: Why should society as a whole be interested in investing in these types of companies?

 

Astrid Scholz (laughs): I love these loaded questions. Well, it depends. If society is happy to invest in people who are figuring out how to get to Mars, then there's no need to invest in alternative companies. But if society is interested in companies that want to address some of our most serious social, environmental, and economic challenges, then they should also be interested in new investment forms for alternative types of companies.

 

Christoph Bietz: Astrid, thank you for the conversation!

 

Info-Box: Bennet Barth is the Director of the Respond Accelerator Program at the BMW Foundation Herbert Quandt. The five-month program collaborates with founders who embed impact at the core of their business models. One key theme is Responsible Leadership.

 

Christoph Bietz: Bennet, what was your initial thought about steward-ownership?

 

Bennet Barth: Initially, coming from my startup perspective, I thought that the principles of steward-ownership clashed with the familiar venture capital principles. However, I find that this topic provides a valuable contribution to the discussion about where we want to go with startups and entrepreneurship. In the second and third steps, I realized the role that this concept can play in shaping the structure of our middle-sized companies.

 

Christoph Bietz: I find it interesting that you, at first, definitely had a little reservation. Do you think we at Purpose live in a little bubble, and is it perhaps utopian to believe in this idea of purpose-before-profit?

 

"Not a niche topic in a bubble"

 

Bennet Barth: I hope not. I see our role at the BMW Foundation and with the Respond Accelerator program as crucial in bridging the gap to ensure that steward-ownership doesn't remain a niche topic in a bubble but is widely discussed. In my opinion, there needs to be a debate about what the purpose and responsibility of companies in society are and how to anchor this responsibility at the core of companies. The past year, in particular, has presented us with significant global challenges and now offers us the opportunity to rethink business as usual and focus on what truly matters.

 

Christoph Bietz: What do you mean by that?

 

Bennet Barth: I mean that we need a critical examination of what companies are working for. What are we doing, what are we spending those forty, fifty, sixty hours a week on, what are companies earning money for, and how is that money being used, and are we investing in the future? These are all questions we need to address, fundamentally and broadly.

 

"How investment works will change"

 

Christoph Bietz: Another point to consider is how investment specifically works for purpose-driven companies...

 

Bennet Barth: It can certainly work if we mentally detach from how we've traditionally thought about classic equity capital. Investments in the future may no longer fit within a fixed 10-year timeframe, and investments in the future may not yield quick flips with 10x returns. I believe this approach has had its time, but I also believe that this approach alone won't carry us sustainably and into the future. The Purpose model helps us rethink how we can structure venture capital investments and startup financing differently. There are many other paths that enable different investment approaches, ultimately leading to more research and profound innovations. I think these investment cases can be created—or rather, they will create themselves. The art is finding the right financing model for the specific situation. But there's no question in my mind that the understanding of how to invest and where capital flows will change. And the necessity of this change is unquestionable.

 

Christoph Bietz: To wrap up, what does collaboration with Purpose look like in practice?

 

Bennet Barth: For the BMW Foundation and RESPOND, Responsible Leadership takes center stage—along with the question of mindset. Purpose is encountered on various levels: The BMW Foundation is closely linked to the Purpose Foundation and is also an investor in Purpose Evergreen Capital. Within RESPOND, we offer coaching on the concept of steward-ownership, which is closely tied to the Purpose idea. With its central question of "who actually owns this ship?" it's a significant aspect of Responsible Leadership and leadership understanding, which we thoroughly discuss with the founders in the program.

 

Christoph Bietz: Thank you very much, Bennet, for your insights!

 

Info-Box: Prof. Dr. Dr. Ann-Kristin Achleitner is a professor at TU Munich, a board member of several publicly traded companies, and a member of the ifo Institute's board of trustees.

 

Christoph Bietz: Hello, Prof. Achleitner! I've already spoken with Dr. Astrid Scholz, the founder of the Zebras Unite movement, as well as with Bennet Barth from the BMW Foundation about Purpose and Steward-Ownership. Now, I'd like to ask you: What about the idea that convinces you?

 

Ann-Kristin Achleitner: I am convinced of the potential of steward-ownership to legally realize a company's long-term orientation on an alternative basis. This is interesting for medium-sized companies because many of them face succession issues. Steward-ownership makes it easier for them to transfer the company to like-minded individuals, those who feel a connection to the company and its societal purpose, rather than to genetically related individuals. In many cases, this can prevent a sale or even the dissolution of the company, which often becomes necessary when no one in the family wants to take over the business.

 

Christoph Bietz: What advantages does this concept offer to startups?

 

Ann-Kristin Achleitner: A crucial advantage is that startups can promise from the outset that they are committed to economic sustainability and societal impact. This explicitly rules out a future sale.

 

"A lack of economic incentive is a misconception"

 

Christoph Bietz: This concept is often questioned precisely for this reason. We are frequently confronted with the argument that it's purely idealistic to believe that entrepreneurs would willingly forgo profit distributions. They say it lacks the crucial economic incentive.

 

Ann-Kristin Achleitner: Behind this statement is a clear conviction about what fundamentally motivates people. However, people are motivated by different things to varying degrees. Even a few years ago, surveys showed that the majority of founders started their startups out of passion and enthusiasm for the cause. Only a minority of them started a business with the goal of eventually selling it lucratively. So, I don't agree that the economic aspect is all-determining for all founders. Furthermore, there are entrepreneurs who make immense contributions without significant personal financial incentives, as demonstrated by social enterprises. Aside from that, steward-owners also have monetary incentives. There's nothing stopping them from paying themselves a good salary or performance-related bonuses if the business is doing well. To answer your question: I don't consider it a pipe dream or mere idealism at all. There is plenty of evidence and scientific knowledge that contradicts these objections. And we must never forget: it's about giving a new option to a specific group of people and companies who can choose it. The fact that some people are so committed to it and are pursuing it shows that there is a need. If it were wrong and the concept didn't catch on, there would be no real harm done by expanding the possibilities.

 

"There are models to bring investors on board"

 

Christoph Bietz: The next big question concerns the feasibility. No exit and no tradable voting rights, wouldn't that deter investors?

 

Ann-Kristin Achleitner: Not necessarily. I am quite sure that steward-ownership and sustainable startup financing are not mutually exclusive. There are already models to bring investors on board, for example, through debt instruments like loan agreements, which can also be associated with corresponding return prospects. Moreover, the shift in values that is currently taking place among customers, employees, and other stakeholders should not be underestimated, and it will also shape the landscape of investors. The economy can no longer be considered separately from sustainability, social aspects, or leadership. We already observe that investors are increasingly interested in these issues. I am convinced that as steward-ownership becomes more widespread, entirely new groups of investors will emerge, and they will invest under the conditions that are possible. The ball is already rolling.

 

Christoph Bietz: One last question: how do you evaluate the societal role of steward-ownership?

 

Ann-Kristin Achleitner: Firstly, it's important to note that companies, in general, have a societal responsibility. The vast majority of companies in Germany fulfill this responsibility. However, times are changing, and it's more important than ever not just to meet this responsibility economically and create prosperity but also to address ecological and social challenges. Globally on a macro level, but also on a micro level, in every state and in every industry. In Germany, we have a very good system with the Social Market Economy, which aims for the well-being of all and increasingly considers planetary boundaries. We need to strengthen this system in an ecologically and economically sustainable way. Steward-ownership can help in this regard. We should give it a chance.

 

Christoph Bietz: We completely agree with that perspective. Dear Prof. Achleitner, thank you very much for the conversation!