Harry Doull and his partner, Stephen Tracy, both walked away from Google and headed toward candles. Yes, candles- the duo founded Keap, a zero-waste, artisanal candle subscription business lighting up the market. But not only is Keap proposing a solution to more sustainable candles, they’re also a model for steward ownership, a business structure that ensures that the founders and employees control the company, not by remote investors or shareholders. Through this structural model, as well as another alternative form of capital they’ve implemented, Keap is ensuring that their profits continue to serve their greater purpose of fighting for the environment. Read below to learn more, and see if their model might work for your company:
First, tell me about your company, Keap. What is the ethos and mission of your company?
Keap is a candle company making master perfumer scents with an environmentalist approach. We’re able to offer the equivalent of a Michelin-star experience at a fraction of the price by selling our candles direct-to-consumer, via a subscription.
Candles have an incredible ability to help us reconnect to ourselves, to our homes, and to nature—and this reconnection is at the heart of how our company operates. We see a pressing need for the way we do business to move away from “Less Bad” to Regeneration—and our goal is to show that everyday products can be a “net positive” for people and planet, if we work with a different mindset. Not only can they be a net positive, they must become so if we wish to have any hope of overcoming our climate crisis.
What is steward ownership, and why do you believe in it?
As Juho Makkonen eloquently said, “Steward Ownership is Capitalism 2.0”.
The term was coined by the Purpose Foundation: “Steward Ownership” serves as an umbrella term for the various forms of ownership that ensure the perennity of a company’s purpose. It rests on two core principles:
Profits = means to an end, not an end in itself
The mission of the company is the key priority and profits are necessary to achieve that purpose. Steward owned companies make a legally binding commitment not to use the company as a speculative asset for private gain.
Ownership = Entrepreneurship
Control rights can only ever be held by people who have an active role in the company and take responsibility – not by remote investors or shareholders.
For entrepreneurs and investors looking to create profitable companies that stand the test of time, and fuel a meaningful purpose, Steward Ownership is a great answer. Entrepreneurs can still raise capital, investors can still earn a healthy return. Juho’s post does a great job outlining the benefits of this approach.
For more on steward ownership, I recommend this TED Talk by Armin Steuernagel, co-founder of Purpose Foundation.
What is the first step a company can do to steer themselves towards steward ownership?
The first step is to have a deep conversation about what the purpose of the company is. Who are the long-term beneficiaries of its activity? Once the founders are out of the picture, who are the people best placed to ensure the company’s purpose stays alive and well?
While companies of any stage and size can make the transition to steward ownership, these conversations are harder to have if the owners of a company don’t all share the same passion for the company’s purpose.
For those who are interested in starting this journey, I highly recommend reading through this great pdf from the Purpose Foundation which simply and clearly outlines various options, alongside great case studies.
At Keap what are the alternative forms of capital you are using and why are they working for you?
We recently started conversations with investors for an equity alternative called “Flexible Redemption Stock”. We initially heard about it through Boma Investments, who came about it from the perspective of an early-stage social venture fund. They faced a common dilemma: the reality of the social enterprise market is that there are not enough equity exits for the traditional venture capital math to work. Therefore, social equity investors do not have a mechanism to realize equity-like returns commensurate with the risks inherent in early stage social businesses.
While the structure was meant to solve this problem, it also solved ours because it provides equity-like returns to investors, both in IRR and risk, while also not forcing us—the current company stewards—to sell the company to remote owners.
This approach allows us to chart our long-term course where the company owns itself, while financially rewarding our investors who helped us engender a purpose-driven company built for the long-term.
How does this all fit into a broader, regenerative view of the economy, and the world at large?
The investment community is starting to realize (with SVC being way ahead of the curve) that our economic operating system is in need of a serious reboot. Reforming capitalism to take into account natural and human resources is the single largest systemic change we need to make. Yes, it’s really hard, but we don’t have a choice—and that’s precisely why it will happen.
A regenerative economy is one where our impact on people and planet from producing and consuming is not bad, less bad, or neutral—but actually positive.
In a world where companies are structurally designed to use profits to serve their purpose, and not vice versa, I can see that happening.
Why did you decide to join SVC, and what are you most looking forward to as a new member?
I had the chance to attend the last annual SVC conference in November. I’m not a huge fan of conferences, to be honest, but this was different. I was blown away by the incredible people I had the privilege of meeting or hearing speak. The diversity of viewpoints represented was particularly inspiring. I found that across the various groups in the “impact” space, this was the one most willing to face hard truths, and reckon with the reality that incrementalism is no longer viable. And after those few days, my partner Steve and I left completely recharged, re-energized and empowered to tackle hard challenges and face the nay-sayers. It felt like we had finally found our people.
I’m very excited to connect with more people in this incredible community and find ways that I can assist others facing similar challenges to ours!