Over the course of Equal Exchange’s 33-year history, we’ve witnessed a constant stream of mission-driven businesses create waves in their industry, get big, and then … sell out to a faceless corporate behemoth — a Greek tragedy in three acts. Sometimes the early investors demand it. More often, the founders, or whoever happen to hold the keys to the place at that moment, are given an offer they can’t refuse: take the piles of cash or get crushed by their cutthroat competitors. The generous ones spread some of the bounty to the workers. The committed ones try to negotiate a way for the mission to live on, but frankly, we’ve never seen that work out over the long term. A few years later, most will confess that the money wasn’t worth it.
So, how has Equal Exchange avoided this fate for over three decades while growing into one of the largest and most successful worker-owned co-operatives in the country? To think that it was because we’re purer of heart and resistant to temptation would be hubris. And we know what the Greek Gods did to those who suffered from that.
Two clues lie in another kind of Greek story, that of Ulysses, hero of the Odyssey. During his adventures returning home from the Trojan War, Ulysses wanted to hear the Sirens, whose glorious singing had the unfortunate effect of causing sailors to crash on the rocks. But first Ulysses ordered his men to bind him to the mast of his ship and fill their ears with beeswax. When Ulysses heard the Siren’s song, his crew ignored his orders to crash until they were out of danger.
It turns out that there are plenty of investors and lenders happy to take a supporting role knowing that we’ve prevented ourselves from selling our company, and our mission, to the highest bidder.
Early on, the worker/owners of Equal Exchange recognized the dangers of sailing a social mission-driven company in cold capitalist waters. Instead of beeswax and rope, we added a clause to our bylaws that says that all net proceeds from a sale are to be donated to another Fair Trade company. If we ever took that offer too big to refuse, we wouldn’t get to keep any of the money.
Does this mean we can’t grow? Hardly. With our innovative use of non-voting preferred stock, we’ve raised over $17 million in outside capital and millions more in loans, with plenty more available should we need it. It turns out that there are plenty of investors and lenders happy to take a supporting role knowing that we’ve prevented ourselves from selling our company, and our mission, to the highest bidder. This model allows us to use capital as a tool, rather than have it control our company.
These two elements, our “No Sell Out” clause and our co-operative capital model, have helped us protect our company’s social mission from those otherwise “unrefusable” offers. If others want to sail in the same dangerous waters without ending in tragedy, they would do well to follow our example.
Daniel Fireside is the capital coordinator for Equal Exchange.