Why a Bay Area IT Firm Made the Transition From Owner-Operated to Worker-Owned to Secure Its Future

Matthew (00:01)
How do you think maybe technology could have helped to speed any of that process up?

Jerry Skomer (00:05)
If we had had something like Zolidar where we could have seen just about everything. mean, you can jump ahead, you can go backwards, Your website would have been really helpful in terms of determining what was in front of us. When it's all laid out there the way you guys have done it would have been very helpful. The knowledge is so spread out and not centralized. mean, things like that you do in terms of determining sale prices would have been much faster and much more organized and much more comprehensible. You, the owner, can play with the numbers yourself. Ask all sorts of, if I understood it right, a lot of what if questions. What's really good about it is that owners can come into that and see how they don't have to necessarily just sell to private third parties. They can go, look at this. This is, if I follow this process, I can get this done and if they have attitudes like mine, which were, want to protect my employees, or I just think this is a great idea, it would have been invaluable.

Matthew (01:15)
Today my guest is Jerry Skomer. Jerry is the former owner and president of Alternative Technologies, where he led a thoughtful and values-driven transition to employee ownership via a worker cooperative. Throughout his journey, Jerry balanced his two top priorities, ensuring he had enough financial security for retirement and protecting the future employment of his long time employees. In this conversation, Jerry tells us how he explored a management buyout before employee ownership.

But then quickly found out his leadership team was not interested in risking their homes as collateral. He also shares how he navigated the complexities of learning his business's value, from trying to understand terms like EBITDA and multiples with the help of his CPA, to ultimately realizing that valuation is a market-driven proposition. Check out the show notes where we've defined all the terms used in this conversation. What was Jerry's greatest challenge? Learning to trust the process, letting go of control and trusting his team to take on greater leadership.

Even when their approach felt less agile and more risk averse than his own. If you enjoyed this podcast, don't forget to subscribe and follow it on your favorite podcasting app or YouTube. It's the best way to stay connected and helps the show tremendously. With that, I bring you Jerry Skomer of Alternative Technologies. Let's ride.

Matthew (02:39)
All right, welcome back to the Bicycle for the EO Mind podcast. I have with me today the former owner and president of Alternative Technologies, Jerry Skomer. How are you today, Jerry?

Jerry Skomer (02:49)
I'm well, thank you, and you?

Matthew (02:51)
Doing well, thanks. Really appreciate you being with us today. So what is your favorite quote and why?

Jerry Skomer (02:54)
Pleasure.

That's a good question. There are several quotes I like, but the one I've been thinking of lately is lyric from a song by Laurie Anderson. I don't know if you know who is. She was an experimental musician married to Lou Reed for a number of years. She wrote a song called Ramon and the song is what I like about song is maybe the most compassionate lyrics I've ever read in any song. really exemplifies. Something or a standard worth living to. And I think in today's climate with everything going on over the past few months, this song has resonated with me and it goes something to the effect, well, this is just one lyric, I'm not gonna do the whole song. God knows I'm not gonna try to sing it. So anyway, but the song, the lyric, the stanza that I like says, so when you see a man who's broken, pick him up and carry him, and when you see a woman who's broken, put her all into your arms, because we don't know where we come from. We don't know what we are. and I've always found that.We don't know where we come from and we don't know what we are and I really do subscribe to that attitude that you can spend a life 
 worth learning things, but in the end, there's a mystery to life that we don't know what we are. We may as well be kind when we see somebody who needs it.

Matthew (04:23)
Well, yeah, I think through a lot of the story that we'll get into today, we'll see how that kind of flows through your approach as a business owner. Yeah, so to kind of get us into that story, what exactly prompted you to think about selling Alternative Technologies?

Jerry Skomer (04:36)
Well, primarily, as I aged, it was more difficult for me to work as many hours as I used to work. so I would say it's age related that I needed to slow down. And so I did. and I put plans in motion to get me out of the business.

Matthew (04:56)
Yeah, and What were some of those sort of top of mind considerations as you were starting to think about that?

Jerry Skomer (05:01)
Well, money was one. I had to make sure I had enough to retire. Although there's never enough, but I had certain minimums that I had run my own budgets on. And The next, and equally important to that, if not maybe even a little more important, was protecting my employees from a potential buyer who might throw them off out of work. I had had staff who worked for me for over 25 years and the thought of them being laid off at a late stage in their own lives was difficult for me to countenance. And So I wanted to, if I could do something to protect them.

Matthew (05:46)
Yeah, so with those two kind of priorities in mind, making sure you get a fair price for yourself and your retirement goals, but then also protection of your employees, What were some of the actions you took to plan your exit?

Jerry Skomer (05:56)
Well, it was a scattershot approach at first. I hadn't really thought a lot about it. I'll be honest with you. I was always working hard, never really thinking much about my upcoming retirement. But the first thing I did was contact colleagues who had sold their business. and that was interesting because their approach was different from mine.

They were maximized the dollar and I wasn't, although I wasn't opposed to doing that, I wasn't, that wasn't my primary, was one of several goals, not just the only goal. And so that became pretty clear for me from talking to my colleagues that their approach wasn't going to be my approach.

Quite honestly, their approach in business had never been my approach in business, so that made sense. Although we were collegial, we were not the same in terms of our business approach. Then I talked to my financial advisor and my CPA. CPAs have much more say in what you do than I knew going into business, that's for sure.

So I had to figure out what made sense for me monetarily in terms of if I were going to sell it, how to be paid out and that kind of stuff. and then I did something that really paid off, which was I formed a task force within my company to take the journey with me to see what was possible. One of the things that came up that I initially thought of was selling to my management. I was in a technology business. It's called Alternative Technologies, as you mentioned at the start of the program. And I thought perhaps I might sell to them. They were three women in a technology business. And that's unusual that you had, at that time at least, women actually running all aspects of the business. And I wanted to initially sell to them. I said, so you want to buy it? Kind of funny, kind of, what? I said, well, I've been thinking about this.
Then I said to the manager, by the way, you're probably going to have to your house up as collateral. and they all kind of freaked out. we started thinking realistically of what might happen. pretty much moved off of the fact that they wanted to spread the risk. Let me put it that way. I think that was their calculation They didn't want to take on the sole risk of making sure there's payroll each month.

Matthew (08:36)
Just to be clear, so then the task force and the management team were synonymous with each other?

Jerry Skomer (08:39)
The initial task force, there were two task force. The initial task force was just the management team and me and figuring out what to do and then once we came into the employee ownership model and we talked about that and we did some initial exploration of that, we then formed a larger task force of seven people within the company who became the leaders for the employee ownership co-op. They became the forerunners of the co-op. and we worked two years, for God sakes, on it.

Matthew (09:19)
Hear a little bit of feedback that that maybe was a bit longer than you wanted it to be.

Jerry Skomer (09:22)
Well, we were in the middle of pandemic, so that didn't help. That slowed everything down. It was a mess. Just in terms of business, as you probably remember, it's like the entire economy was almost froze and it was dicey times. So I'm trying to sell. The economy is frozen and so it just slowed things down immeasurably.

Matthew (09:51)
So for these seven folks that came together, is kind of what united them that they had all exhibited leadership qualities. Is that what you were thinking about?

Jerry Skomer (09:59)
Well, I chose them. I actually went through thinking about the different departments and trying to pick somebody from each department so that there was representation from sales, from tech support, from admin, things like that and I tried to choose people who were, well, I have to say it's smart. I just, yeah.

Matthew (10:23)
That helps.

Jerry Skomer (10:26)
There are lot of good hearts, in something like the sale of a business, you've got to get some savvy staff people to represent the interests of their departments and the company that they're going to own and so I was careful in people I chose. And I also people I was interested who could work together. So it was a fairly delicate process, more delicate than I it worked. There was only one person who had

I wouldn't say time constraints, but that's not how he wanted to spend his time because the resources that we put into it were incredible number of hours. I allowed and I don't know if that's the right word, but we used business hours during the day. So that took away from seven people out of 40 spending hours a week figuring out how to buy the business was a pretty significant investment on my part because it really did affect the bottom line. But anyway, the task force, only one person couldn't deal with the details of the conversion because there are a lot of them.

Matthew (11:52)
Absolutely, yeah, and we'll get into sort of the working with finding a consultant, working with a consultant. But yes, you mentioned the pandemic, I wanted to sit there for a moment. So you mentioned the economy freezing. Is it like kind of fairly polarizing effect on the economy, right? That many businesses either like sort of took off in some way because of the pandemic. I imagine in the technology space, you're probably more in a position to do better because of the pandemic. Is that fair?

Jerry Skomer (12:14)
No, not. No, that wasn't my impression upon with my colleagues or anything like that. Our niche, and this is the reason I think my company was successful, was the nonprofit world and the nonprofits were scared. and people had stopped giving to the nonprofits. So there was the technology needs though were still the same and in fact, as you point out, they had shifted a little because they shifted from going to the office to working remotely. It wasn't an atmosphere where people wanted to spend money. In fact, if anything, they were freaked out and wanted to pull back and wait and see. But we were able to straddle the by that I mean we had enough support from the PPP program and things like that that the government put in place to keep all our staff on board. We didn't lose anybody during that time. So, we came out of it, but the planning and the economy was dicey for us.

Matthew (13:29)
Yeah and part of the reason I wanted to get into that question is because something we think about a lot at Zolidar is, know, within our sort of indicative valuation, we have a tool called the Aha! Planner where we're talking about, you know, sort of first snapshot value of a business. I was curious if, you know, Did you have a tool in this time to be looking at the value of the business? And if so, was it impacted by the pandemic?

Jerry Skomer (13:47)
Yeah, it's called the grapevine. Everybody tells you how to do it. As you know, I mean, you know better than I do. I've seen your website. It's fabulous. I wish I had had it, frankly. And So at the time, I asked my CPA, what's this thing worth? I had no idea. He goes, he said, EBITDA or something like that. I said, what are you talking about? It stands for, I don't know, taxes. It's your profit margin before you have all sorts of taxes and things that you have to factor out. and so that reduces your core net worth. And Then they say, well, you multiply that between two and five times depending on the market, maybe more if you're a bigger company and that's your magic number so I learned pretty quickly that that magic number wasn't as big as I had hoped, but It served as an initial jump off point, but in the end, it's a market driven proposition. I I had contacted a, just to be thorough, I contacted an outside consultant who sold businesses as people normally do, as either merger and acquisition or just a sell to some other party who wants to buy your business. And he had all sorts of ways of thinking about it and the number was at one point, there was a range and he just said, well, whatever we can sell it for. So I,  it was kind of weird.

Matthew (15:30)
Right, because we would hope like, it's like a house, right? So it's like, this is what the price is, right?

Jerry Skomer (15:34)
Yeah, you felt you're going to go to eBay or something and somebody's going to quote you a price or bid on it. I came to a number I took the lower, I took the lowest number of the what I thought was fair and then proceeded with that. And that proved to be a problem still with us. So that was kind of funny. I had this bottom number and I was so I came in and go, all right. You know, I'm such a good guy, I'm going to take the bottom number of all the evaluations I saw. And then I was told, well, we can't borrow that much money. So I had to do some creative things, which I'm sure you're going to ask me about later on.

Matthew (16:13)
Absolutely. So yeah, you see it's spoken at the CPA and then you also have this M&A advisor as well who had some other tools for methodology So those are the tool kind of two key tools you had is that right?

Jerry Skomer (16:25)
Yes. and colleagues.

Matthew (16:26)
Perfect. Okay. and then, yeah, so I want to then step again back a little bit to, so we were at this point of, we had the two different tasks forces. So the first was the management task force and, you know, you were like, want to put up your house for collateral and then no, no, no. Okay. Now we're pivoting to let's spread the risk, which we know from knowing the story that it, the worker co-op then became the answer, but I'm curious, like, how did that.

Jerry Skomer (16:41)
Forget that.

Matthew (16:51)
Conversation about risk go? How are you explaining risk and how are the employees thinking about it?

Jerry Skomer (16:57)
I don't know if it's a little secret. I don't know that they really understood it, frankly. They certainly, I'd say 10 to 20 % understood it, but in some ways they weren't at risk for all that much. I mean, what we opted to do was you bought into the co-op model by putting up an amount of money which in the scheme of things is relatively modest for the employees it was it hurt a little bit they had to come up with $2,500 to be part of the the employee ownership model and they that was their risk aside losing their job and so that's that's manageable in the scheme of things over a lifetime so i don't know that they were on the hook for very much and it's the lender who was on the hook because the employees could walk away or the owners, employee owners could walk away. wasn't much. They didn't have to sign personal guarantees. So the co-op protected them over and above their initial investment.

Matthew (18:11)
Yeah, and I think to help us also, because you mentioned the crucial role of the lender in that, so maybe we could go there for a moment. Could you talk about, yeah, how did you approach the lending and the financing?

Jerry Skomer (18:21)
Well, it was interesting. We had a bank who was set up primarily to help co-ops get off the ground. And so we found out who they were. And so we went to them and they said, yeah, we'll give you X dollars. And that wasn't enough. And so then I had to get involved. I am now a person who has loaned money in essence to the company because I didn't, I'm taking something called an earn out. I don't know if you've spoken about that or in your website, you talk about what an earn out is, but that's when an owner basically gets paid out over a length of time for the amount that he or she is owed for the company. So when you have the earn out amount that the company will pay me and add that to the bank's initial loan, that's how we finance the sale of the company.

Matthew (19:30)
Could you, if it's okay, could you put that in sort of like terms of percentages of what that price ultimately was? So how much banking?

Jerry Skomer (19:37)
I have think about that. It was like probably two thirds, one third, two thirds from the bank, one third from me.

Matthew (19:44)
Yep and just to underscore that point with the 2,500 you mentioned, so that ended up being like a nominal portion, right?

Jerry Skomer (19:44)
Over spread out over the years. Yeah, yeah, that didn't raise a lot of money for the company. And that's the interesting thing. have to really, when you go this route, the one thing is there aren't a lot of deep pockets around. And so it can get a little bit hairy or really what it is is that the owner sometimes has to take on more risk than they were necessarily initially calculating. I mean I wanted to walk away, frankly. I wanted all my money, I wanted to walk away and wish them well. But now I am still involved. In fact, tomorrow I give a speech at the end of all staff meeting to say goodbye to a staff person. and I didn't think I'd still be involved. I'm on the board of directors for the co-op. But that was, I placed myself on the board. I actually required it as part of the earn out. I said, I'm gonna owe you that much money or you can owe me that much money then I need to be on the board. need to at least have, and then I have in my situation, I was a little bit rough. I requested and well demanded that I get, I get veto power over management hirings

Matthew (21:19)
That's during the period of the earn out.

Jerry Skomer (21:21)
Yeah, well, now I only took three years. can't, I don't want to be on for six or seven years. The earn out is going to last. And that's a risk. Yeah. But that's the, if they make it three years, which I'm sure they will, then it shouldn't be a problem.

Matthew (21:31)
Got it, so about twice as long. Yep. Long enough to get used to this, some of the change in governance and all that.

Jerry Skomer (21:44)
Yeah.

Matthew (21:45)
Yeah. And just to linger for a moment on that 2500, so was that, were you a part of that discussion of how 2500 became the number?

Jerry Skomer (21:54)
No, actually I was and I wasn't. Throughout the process, I allowed the team, the task force to make the decisions. I just had to be told what they were. In other words, they were, they needed to construct their own co-op.

Matthew (21:55)
Okay.

Jerry Skomer (22:12)
They needed to buy into that co-op both monetarily and philosophically. I didn't want to have my fingerprints all over it. They did it, they worked really hard. They worked, like I said, during business hours, so that was an expense that I shouldered. But it worked in the sense that this wasn't something that I constructed. It was their baby.

Matthew (22:41)
So you've, you've done a couple of, you you spoke to your CPA, you got a number. You're like, not sure you engage this other consultant is an and a consultant and looked at the couple of different methodologies. And, know, you got a range and you're like, I'm going to take the lower part of that range and you're going to come up as the knight in shining armor. You're like, I took the low number and they're like, Nope, that's not going to work. So.

Jerry Skomer (23:02)
It's like limbo, go lower.

Matthew (23:03)
Yeah. You're like, feel like you kind of can't. like, how did that conversation go with this forming worker co-op and back and forth?

Jerry Skomer (23:11)
Well, I have to say, mean, if you were to see the company and to see the players and the company, we're friends so it wasn't adversarial. It broke down. It broke down a couple of times. There are freak out moments in this entire process and I had one of them when I was thinking, how can I retire? I had to come to the zen of it, so to speak, in having to get my payout over a six or seven year period.

Matthew (23:28)
We went at all of it.

Jerry Skomer (23:48)
It was not a happy time for me. So anyway, got upset when I got upset, but since we were long standing workers who had gone through a lot of growth pains and gone through a lot of pain just in general and technology keeping people's computers and phone systems up and working, we were used to a lot of stress and they realized I just needed to freak out and come back to myself and vice versa. They freaked out. I let them come back to themselves. And so we, that was one thing that I learned and this is not to shift the conversation at all and we can stay on this, but I learned to trust the process. That's not me. If I don't invent the process, I don't trust it. I had to become much more calm about the fact that I'm not going to control this whole thing.

Matthew (24:49)
Thank you for framing it that way, the Zen, and learning to trust the process and that helped you kind of calm down, even though you also had some of these storming moments. And so did this group of seven who were sort of leading the transition charge from that side of it.

Jerry Skomer (24:59)
Yeah. Well, actually, I freaked out in front of the senior staff, the three out of the seven. I at least knew not to take the junior staff and see their leader kind of lose it.

Matthew (25:14)
Seems thoughtful of you which is really a theme to this story. So I'd to, you know, transition our conversation a little bit more into the transitions and like now we're sort of getting down the line, you know, we've got this committee formed that they're having meetings, they're coming up with some of their own decisions, they have to form, they did form their own legal entity as the co-op or

Jerry Skomer (25:16)
Yeah, well, I don't know. Yes.

Matthew (25:35)
Okay, yeah, so they've formed their own legal entity that's actually going to take ownership of Alternative Technologies. So you're finding out and becoming unhappy because you realize, okay, there's going to be this seven year earn out period, you're going to stay on the board of directors as part of the way you're engaged. Was also part of that that you would remain operationally engaged? Okay.

Jerry Skomer (25:52)
No, that was not negotiable.

Matthew (25:56)
So you just stay at the board level at this point. Yeah.

Jerry Skomer (25:57)
Frankly by that point they didn't want me part engaged you know. As much as I delegated authority in general, I was still the bottom line. They wanted as, this was a sign of maturity in my estimation, they wanted to take over. They wanted me to retire.That was a goal of theirs, not because they wanted me out, although that was part of it. They also wanted to see me stop working.

Matthew (26:21)
How big of a shift was that for you? mean, so had there previously been a board of directors?

Jerry Skomer (26:25)
No! You're looking at him. Now it's president, treasurer, vice president, secretary.

Matthew (26:30)
Right, depending on the day of the janitor, whatever is needed, right?

Jerry Skomer (26:32)
That was the joke when I first started the business. He had to answer the phone and it was a client I didn't want to talk to. I just said I was a janitor. No, I wasn't.

Matthew (26:42)
 You weren't lying. So that was, that was, that's a shift, right? Yeah. So now you're sitting in this board seat, you're looking at the business as more of a governor. You do have some special power here, right? Cause you can veto management hiring decisions. there anything else dramatic or surprising in the shift to becoming more of a governance position?

Jerry Skomer (27:01)
Because it's the employee ownership is a very different mindset from a sole single owner. Employee Ownership can tend to be a little conservative in their approach and so when I'm sitting in the quarterly meetings and they're talking about minor issues, I'm like going crazy. In fact, the other day I called up the president of the board and I said, we spent an hour talking about X dollars, are you kidding? That's nothing. Why are you? Stop it. I realize I can't. I said it to him, but I realized that I, he reminded me trust the process. We have to go through this in a co-op way because they're inexperienced and all that stuff. So, Yeah. It would have been better if I could walk away, but I can't so I try not to get too deep into their decisions unless I think of it's really categorically catastrophic. and then I'll speak up.

Matthew (28:04)
Yeah, right.Then you'll get into some of those powers that are uniquely yours, right?

Jerry Skomer (28:14)
Yeah, yeah, but so far that's actually not been anything I've had to seriously contemplate because the people who are still running the company ran it for with me for 10 years. They were there as a collective. These managers are smarter, better, faster, you know, the more bionic than I am. And so they're in good hands.

Matthew (28:40)
Right, that makes it easier to trust the process, right?

Jerry Skomer (28:43)
Yeah, well, that's why I took manage, that's why I said I have to control who the managers are for the first three years.

Matthew (28:51)
Yeah, so I also want to talk about sort of who else is in like essential to this equation. You sometimes we use the term deal team to say like who all was needed in order to make this transition successful. So who else was helping out?

Jerry Skomer (29:02)
Well, we had an outside consultant who was, had experience in helping people form co-ops. I had, I mean, I shouldn't, I don't tell many people this, and this side of my life, but I'm also a lawyer. And so I was able to read the documents. I kind of understood them. I had a friend, a good friend of mine, who's a lawyer down in Southern California. I'm in Northern California and he helped me parse a lot of the stuff that I didn't want to get involved with and learning. He would tell me what his opinions were and so there was that and the outside consultant and the management team and that's about it. We were able to get our way through with that, those people, those players.

Matthew (29:50)
So just to be crystal clear there.

Jerry Skomer (29:52)
Well, there was a lawyer, there's also a lawyer for the co-op.

Matthew (29:56)
That's what I was also curious about,

Jerry Skomer (29:58)
Yeah, so we.

Matthew (30:00)
Sort of you or your own legal representation it sounds like.

Jerry Skomer (30:03)
Yeah, saved a lot of money.

Matthew (30:06)
So I'm just curious like what that process looked like because obviously there tends to be potentially, you know, many different legal documents that are involved in the process of creating these transitions. Did you feel like, what was your process of knowing like what legal documents would be necessary?

Jerry Skomer (30:14)
Yeah, there are. I didn't. I didn't claim. We use a consultant who helped lay it out. we hired an attorney and the attorney started churning them out. And then once they churned them out, I looked at them and my lawyer friend from Southern California looked at them and we corrected them. We edited them.

Matthew (30:42)
Personalized, yeah.

Jerry Skomer (30:43)
Yeah, the lawyer was experienced in the formation of employee ownership co-ops. They started the process and they kept feeding the process and then, like I said, we edited them. And the co-op team did as well. They were a little less experienced and they kind of relied upon me to sort of say, this doesn't seem clear. We need to think about this.

Matthew (31:09)
Okay, so that's interesting. the co-op team, the seven folks, they also had their own legal counsel that was different, right? They were engaged in their own process and I imagine that for them, the bylaw development process was crucial, right?

Jerry Skomer (31:21)
Yeah, they took forever. That was the one thing that I was a little frustrated with, but they sweat the details on that really significantly. Yeah, the consultant was kind of surprised at how seriously they took that development of the bylaws. They're really, it was voluminous. That's the thing as a single owner, go, my God, forget these. That's right. That was something I had to sit back and just allow because my personality is so not that. But it worked. I mean, there are bylaws. The staff says, I want to do this thing. Well, let's look at the bylaws.

Matthew (31:47)
Here's the bylaw of my way or the highway.

Jerry Skomer (32:08)
By God, the bylaws tell them what to do. So was really worth the investment of time.

Matthew (32:13)
Awesome and Keras also in terms of sort of the tools that went into all of this, would you say, did you have like a roadmap that kind of gave you a sense of like A to B, C?

Jerry Skomer (32:23)
Wasn't that was something that I wish had been a clearer. There is a there were roadmap, but we took longer than than they then we were told it was going to take. That was because of the pandemic. That was because the team, the co-op leadership team was anal in their approach. So everything took a lot longer. I mean, what was a two year, was a one year process really came to two and a half years.

Matthew (32:58)
Being really deliberate with the process that's kind of what was driving that you say.

Jerry Skomer (33:02)
Yeah, yeah, that was it, those two factors. They really did slow things down.

Matthew (33:08)
But it's, yeah, so I mean, you mentioned like, really saw the upside of it was sort of in the quality of what the team was producing as a result. Is that right?

Jerry Skomer (33:14)
Yeah, that's true that that. That makes a big difference because people, if you don't rush them, they feel empowered and they were able to wrestle down all sorts of minutiae. And so it's a strong foundation as a result and the company doesn't have a lot of questions about how things run. They can change the bylaws if they want, but the bylaws have thought about just about everything.

Matthew (33:50)
Of course, being a technology company ourselves, I mean, do you think there were ways that like, How do you think maybe technology could have helped to speed any of that process up?

Jerry Skomer (33:58)
Well, that's what I was saying, If we had had something like Zolidar, where we could have seen just about everything. I mean, you can jump ahead, you can go backwards, can your website would have been really helpful in terms of determining what was in front of us. When it's all laid out there the way you guys have done it would have been very helpful, I guess is what I'm saying.

Matthew (34:25)
It's a quick shout out to Deborah Farrell, who's a big part of this and is also starting out on a consulting practice. I was talking to Deborah a little bit about this and, know, was showing that we're soon to launch our community, which will involve, you know, a knowledge base slash Wiki. We'll also have a forum and Deborah's first comment was, I would have been living on this website during this time.

Jerry Skomer (34:45)
Yeah, we would have been. Yeah, that would have been really helpful. The knowledge is so spread out and not centralized. I mean things like what you do in terms of determining sale prices would have been much faster and much more organized and much more comprehensible. because you can play, You the owner can play with the numbers yourself. Ask all sorts of, if I understood it right, a lot of what if questions.

Matthew (35:16)
Absolutely. Yeah. And that's two different ways. So one of which is, course, we have our chat bot. So our AI chat bot, Zollid AI, has been trained on employee ownership. But then there's also literally what we're about to add as well as what we're calling a what-if analysis. So with those numbers, you can actually create scenarios to model them out.

Jerry Skomer (35:28)
No, really, Yeah. That's, yeah, like Deborah said, I would have lived on that. You know, and I can see owners. What's really good about it is that owners can come into that and see how They don't have to necessarily just sell to private third parties. They can go, look at this. This is, if I follow this process,I can get this done and if they have attitudes like mine which were I want to protect my employees or I just think this is a great idea it would have been invaluable.

Matthew (36:07)
To go back to that term freak out, do you think it maybe would have helped out with some of that? Like make that a little easier.

Jerry Skomer (36:12)
I don't know about that. freak out easily. yeah, in theory, that's true. Or for more measured people, more measured owners or calmer owners. Guess that would have been that it would have helped the freak out factor.

Matthew (36:27)
Yeah, I was sort of curious. It sounds like freak outs and we're kind of sometimes arising from, this is taking longer than expected. You weren't going to get exactly the price that you thought you would in the process. Were there any other surprises along the way?

Jerry Skomer (36:39)
Employee Ownership has a different mindset than a small partnership or a single owner. It really is. And you have to give up your notions about how business necessarily runs when making decisions.

Matthew (37:00)
that was on the side of course they have to decide things like the bylaws, but it sounds like you're thinking about something bigger as well.

Jerry Skomer (37:05)
Yeah, I'm thinking about entrepreneurial spirit. The employee owners can be sometimes, not always, risk averse. So you have to be wary of that if you're a co-op. You can't, especially technology, changes. And you must be agile. Sometimes being agile means you make a bad decision. I like ours, I've told them just the other day that I didn't think they were being agile enough that they needed to be a little bit risk accepting. Yeah, and I use the example, we tried to do photocopiers. That was the biggest mistake we ever made. But it was still a risk worth taking because we found out. So anyway, that co-ops can be because they can't, they have to make that transition from being workers to owners. And workers can sometimes be a little bit tight with decisions that could affect their livelihood.

Matthew (38:05)
Yeah, and there's something about that. Like you just said about the photocopier example, you were in a mindset because you had the power, you had the risk, you had the investment. You functionally were in some ways Alternative Technologies that when you saw an opportunity like photocopiers, you knew and you could zone in on like, have to take this risk.

Jerry Skomer (38:21)
Well, hotocopy is a funny one because I actually said over my dead body when they came to me with the idea, but I accepted the idea and then it was a big mistake. I got to say, told you so. But, you know, but we still took the risk and and we had we had budgeted how much we were going to lose and we lost it. And then I said, that's it. We're out.

Matthew (38:43)
But the decision to do that, right? That you knew like, okay, this is a risk worth trying. Yeah.

Jerry Skomer (38:48)
Yeah, and co-ops have, yeah, because you have a lot of people in the collective who worry about losing their job because when you take a risk, could mean cutbacks and all sorts of things.

Matthew (38:49)
So how do you do that collectively is the question. I want to move a little bit more towards the post transition. So some of the reflections that you've had through this process. So looking back, how do you feel about choosing worker ownership as your exit path?

Jerry Skomer (39:14)
I feel really good about it, actually. The way, you had, at the time I thought it was the right thing to do and I'm convinced it is the right thing to do. I think that I started the podcast out by the song from Laurie Anderson, which talks about picking people up and embracing them. I just think that owners need to give to their staff because their staff is what made you a company in the first place. So anyway, that's just my, a lot of people disagree with me about that, but I have a strong ethic. And so I think now, the same as I thought at the time, that it's the right thing to do and I'm glad I did it.

Matthew (39:59)
Would you say like you had been building the company toward this kind of an outcome all along?

Jerry Skomer (40:04)
Yes. The company, my wife calls it my monkey business. But the notion there is that profits were not always the bottom line. Doing good work, we service nonprofits. so what was nice about it is that even as a staff person, you could feel like you were helping the world, you know, either battered women's shelter or environmental groups or whatever, by helping them, you're helping the world. And so we were a company that always emphasized the value of its employees as one of the things that made us who we were. And so the employee ownership model was devoted right into that. I started the company with that in mind, that if somebody was sick, you took care of them. That if somebody we paid, we made sure that they had medical benefits and that they had retirement benefits. These were all things that before they were really talked about in things like B1 corporations, whatever. So yeah, I think that without necessarily knowing that I was gonna go to an employee ownership model, I certainly was aware that the employees are your, it's a symbiotic relationship. It's not just me as the boss. They deserve representation in what happens to the company.

Matthew (41:39)
You'd always had this sense of purpose as well as profit.

Jerry Skomer (41:42)
Yeah, I worked 10 years in a nonprofit myself. So I got schooled in business on that model, which is a different, little different mindset. Nonprofits have a different mindset than a for-profit. I took a nonprofit mindset into the for-profit world and then we became an employee ownership co-op.

Matthew (42:04)
What achievements are you most proud of and do you have any regrets?

Jerry Skomer (42:07)
The company itself is my most proud achievement. That when I started, I was a person of one and that we grew up to 40 people and regret. No, it's funny for all my freak out-ness. You try your best and whatever happens, if you tried your best and you were honest about how you dealt with things and people, if it didn't work, you're not to blame. So I don't have regrets. Necessarily. Just green energy. It didn't manifest itself. know, and yeah, that, those business risks are the easiest to not care about. I mean, you know, it's just business and it comes and it goes and, but it's how you treat people along the way that matters. so I have no regrets about that.

Matthew (43:02)
Moving to our last couple of questions for closing thoughts, What's the first step you'd advise an owner who's thinking about exiting their business?

Jerry Skomer (43:10)
Well, I've used the phrase trust the process that I had to figure out. And don't be afraid of the employee ownership model. It's the right thing to do. So those two things is learn to trust the process. And again, if you don't trust the process, you have Zolidar, who you can sort of figure out what the process is and whether you appreciate what it can bring you.

Matthew (43:35)
Well, I would still say, probably trust the process, but we can also help to make it easier to trust the process, hopefully.

Jerry Skomer (43:41)
Yeah, that's a good way of putting it.

Matthew (43:43)
And is there anything that maybe you wish I had asked about your transition that I didn't or anything else you think the listeners should know.

Jerry Skomer (43:48)
I'd be kind of curious to know if the audience had any things that they've wished we had spoken about, but I can't think of any.

Matthew (43:57)
Yeah, and that's actually sort of my follow up there is, know, is there anything you'd like to hear from the audience if they were to reach out to you and how can they reach out to you?

Jerry Skomer (44:05)
They can contact me, call me, email me. You know, that's I'm open. I'm pretty friendly.

Matthew (44:12)
I'd certainly say so. sorry, maybe you could just also underscore, is there something you'd like to hear a question, just any questions?

Jerry Skomer (44:17)
yeah, sure. I'm a curious person. I'm also a person who likes to help and so if I can help somebody get to an answer of some sort, I used to teach. In addition to being an ex-lawyer and running the business, the technology business, I also taught and was a tenured professor at the same time. But that's another story for another time. But it shows you I like to help. I like to teach. So it's always something that's in the back of my mind. So yeah, somebody's got a question they need to, they want an answer that I can provide them. I'm happy to help.

Matthew (44:56)
Thank you so much, Jerry. Yeah, you've been a great help to us, certainly to, yeah, the employee ownership ecosystem, helping to spread the word about your story and just exemplifying exactly the quote we started with. So picking people up and putting them into care as you can and as you will. So thank you so much for being with us.

Jerry Skomer (45:02)
Yeah, but I don't know where I came from or where I'm going, but I'm happy to do that.

Matthew (45:17)
All right, thanks so much, Jerry.

Jerry Skomer (45:18)
All right, take care.

Matthew (45:19)
Thank you so much for listening. If you found this valuable, you can subscribe to the show on YouTube, Apple Podcasts, or Spotify. Also, please consider giving us a rating or leaving a review as that helps other listeners find the podcast. You can find all past episodes or learn more about the show at zolidar.com slash podcast. Also, we'd love to feature your voice in an upcoming Mailbag episode. Maybe you've got a question for us. Leave us a voicemail at 650-203-6565. Or if you prefer, send an email to social at Zolidar.com. But remember, voicemails make for more engaging episodes. We really do want to hear your actual voice. All right, y'all. See you in the next episode.