Jon Shell - Audio Podcast

The transcription consists of a conversation between Elsbeth Murray and John Schell, where they discuss various topics related to employee ownership and business practices. John Schell shares his experience in building businesses and the impact of private equity on the veterinary industry. He explains how financial capital can negatively affect people's ability to own businesses and his shift towards addressing wealth inequality through initiatives like Social Capital Partners. John also mentions his involvement in advocating for employee ownership trusts in Canada and his work in facilitating the sale of Taylor Guitars to its workers. The conversation touches on the importance of sharing wealth and the challenges posed by monopolies in the economy. John's journey from building veterinary service providers to focusing on broader distribution of ownership reflects his commitment to creating a more resilient economy. Yeah. Are we going to be in the same? How do you want to do it? Okay. Okay. No. Almost never. Yeah. I avoid them. Yeah. No, no, no. It's a time thing. You can really suck up all of your time. Yeah, yeah. Yeah. Yes. Totally. That is the major appeal of this sort. If I have to prepare, I spend a lot of time preparing, which I have. Yeah. Yeah. Oh, wow. August of 24. 23. Yeah. Yeah. Okay. Okay. Okay. So, they spend most of their time not preparing. Yep. Yep. Yep. Yep. Yep. Yep. Yep. Yep. Yep. Yep. Yep. Yep. Yep. Yep. Yep. Yep. Yep. Yep. Yep. Okay. It's been a while. You're all good? Counting down the days? Maybe? Days, weeks, months? In case you don't remember me, I'm Elsbeth Murray. 888, way back when in August. Oh, thanks so much, James. And great to have you here in Goods Hall. So, why don't we just get right into it? We're going to take a break at 11 just for planning purposes, and then we'll finish up our time together at noon. But it is my great pleasure to introduce you to a recent acquaintance, friend. Yes. It feels like we've known one another forever. And to my left here is John Schell. And John and I first met actually in the media because we were writing articles about employee ownership and the benefits of employee ownership and business and a whole bunch of other things. We discovered that John is a graduate of Queen's University, albeit not in the business school. But you've not been back here for, ought to be 10 years. At least a decade. All right. And I count myself very fortunate because John doesn't normally like to do talk that I just discovered. Yes, exactly. Exactly. And so he's been kind enough to actually drive from Toronto this morning. Yeah, exactly. I know. I know. We all know the 401. But let me introduce John. And then the format for today is I've got some questions that I'm going to pose around this whole thing called employee ownership, which I think is vital in a program like this is to really understand as you build businesses or as you scale businesses or as you think about innovation more broadly. How do you share the wealth? Plain and simple. And we can talk about monopolies a little bit later, too. But let me tell you more about John. John is the chair of Social Capital Partners, which is an independently funded nonprofit founded in 2001. His mission is to build a more resilient economy through broad based ownership and quality employment. SCP, I think you really did lead the advocacy for employee ownership trust in Canada and actively participate actually in facilitating that. And I didn't even know this, but you did the financing of the sale of Taylor Guitars to its fourteen hundred workers in the US. Pretty cool. So John was also a co-founder and a member of the steering committee of the Canadian Employee Ownership Coalition and a board member of Employee Ownership Canada. And this is the part I really love. And the Canadian Anti-Monopoly Project. Not that Canada has any monopolies. No. No. Yes. I'm sure we will have a great conversation about that. Co-founded Save the Small Business in 2020. Do you remember what happened in 2020? Global pandemic. A little existential threat there. To fight for commercial rent relief in Canada. And John and Bill Young, who I know, who's another Queen's grad. Is that Bill Young? No. Not that Bill Young. OK. The better one. OK. That Bill Young was heavy duty finance that I was thinking. Started the Ownership Fund in 2020 to invest in promising scalable startups working on a broader distribution of ownership in the economy. Now, John has a very interesting path between social capital partners and where he started. And in actual fact, John and his partner or partners initially partner and then initial and then partners co-founded the largest veterinary service providers in both Canada and Australia. So BA from Queens and then a BA from Western University to the great school as well. And John, on behalf of the class, welcome. And thank you so much for coming to chat with us today. Thank you. Nice to be here. So I have a few kickoff questions, but really this is your session, not my session. So the reason I have a handheld mic here is I'm going to run around. Put your hand up if you have a question and I will run to you with a microphone and we'll go from there. But a wealth of experience. And my first this is my softball question for you, which is how did you get some social capital partners from there? How did you get here from there? Yeah. So I'll give the short version of that story. And I do hope that we get a chance to talk more about employer ownership, monopoly, sharing a wealth, all of those topics as broadly as we can. So in 2006, with a partner, I started something called that strategy, which has been in the news lately and has become Canada's largest provider of veterinary services for better or for worse. We talk about that, too. And then Australia built a similar business starting in 2015. The Australian business was interesting in that. And essentially what I did is I helped business owners, veterinary business owners sell for more money, sell their vet practices for more money. And a vet practice is sold for something like four times cash flow. Since the beginning of that, that's been a standard price supported by the banks. So vets could buy in to businesses and then own them themselves by the owner. And what happened in the 2010s is private equity started getting involved in the veterinary business. And suddenly in 2014, 15, the price of that practice started to go up here in North America. Actually, it didn't really go up by very much. Mostly all of that increase in private equity interest was captured by people who had already purchased vet practices, people like me. In Australia, the price, similarly, I moved there because my wife's from Australia. We met, she said, you have to move to Australia. So we did. And there, the price had also been four times cash flow for a long time. And it was still the case. And so my idea was, well, I'll help a bunch of these vets work together so they could sell all at once for a higher price. Because a group of vet practices are worth more than one vet. And that worked. And we sold 37 practices at one time in early 2016 to an American company, a large vet owner in the U.S. And I thought this was great. And all these vets made probably twice as much as they otherwise would have made, which sounds pretty good. And then the American company said, well, if you could have done this with this group of vet practices, can you buy many more if we continue to offer very high prices? To which I said, yeah, I mean, if you're willing to pay twice as much as they would normally get, yes, I can buy you more. And so I started doing that. And it was only a year later, I, of course, should have seen this coming, but didn't for reasons like, well, I don't know why I didn't see it coming. But we started to hear stories of vet owners who had like 10, 20 year agreements in place with veterinarians to buy their practice, breaking those agreements in order to sell to us. So we essentially broke the path for a veterinarian to own a business. And that was in like 2017, 2016. And that was playing out, of course, over a whole bunch of different sectors in the economy, which wasn't what we had set out to do in 2006. When we started buying vet practices here in Canada, we were buying the practices that there was no one else willing to buy because we couldn't afford to pay any more than the going rate. So we were paying four times cash flow for probably 10 years. And so we wouldn't get the ones. If there was a vet in the business who was offering the same price, they would always sell to the vet. So we would only get the ones that nobody else was willing to buy. That started to change. And so we were seeing the impact of financial capital start to change industries in ways that were negative for people's ability to own things in the economy. And that started to make me worried. I had obviously done really well as a result of that process, but it left the sectors I was working in, and I think a number of other sectors, in a worse spot. So that was a bit of an existential – I hate that word. It was a crisis. It's called a non-existential crisis. I wasn't about to die. It was a non-existential crisis for me, but a crisis nonetheless. And trying to figure out what I could do to think about that problem in a different way now that I guess I had freedom to do that as a result of benefiting from this thing. So there's some issues that one might take with my involvement in all of this. So that caused me to read a book called Capital in the 21st Century, which was a bit of a sensation at the time. This was early 2017. It's a book that no one has read because it's very bad. It's an incredibly difficult book to read. It's 500 pages of charts written by a French person, and it's just hard. But I had nothing to do. So I spent two weeks and I just read this book. And at the end of it, it made sense to me, at least if you have enough time to figure it out, that there was this divide between capital and labor, and capital would always grow at a higher rate than labor. So the more capital is concentrated, the more capital would continue to be concentrated. And that felt like a really big problem to try to get involved with. And so that's when I met Bill at Social Capital Partners. He founded it about 15 years prior to that. He'd been working on issues of income inequality, where he was working to help find people who had various employment, find good full-time jobs. And I was talking to him about the issue of wealth inequality, which is that income inequality is important, but if we don't also solve wealth inequality, then it will just become permanent. And so we started talking about wealth inequality. Through that work of trying to figure out what were the different mechanisms of reducing wealth inequality, we came across employee ownership, which in the U.S. had been around for about, I guess at the time, 40 or 45 years. And it's in a form called an ESOP. And the way, Michael, you gave me a softball question. I've now been talking for what feels like half an hour. Okay, this is my second question. I'm sorry. So the way an ESOP works in the U.S. is business owners can sell their business to a trust. The trust will then own that business on behalf of their employees in the U.S. in the form of a registered retirement plan. And then once they get paid out, out of cash flow from the business, then that business, all of the proceeds long-term will go towards the employees. And at the time, I think it was something like $1.6 trillion worth of wealth in the U.S. was held in the 6,500 ESOP-owned companies covering $12 to $14 million, which is over $100,000 a person, massively successful company like Publix and Amstead and Clif Bar all had these ESOPs in place and people who made money on this, like regular shop-working people. It was like broad-based. Everyone had to have access to it. So this seemed like a revelation, this public policy that not many people knew about that created these trillions of dollars worth of wealth for people and did it in a way that brought them distributed ownership. So most of these is 100% employee-owned, right? And so we started working in that world and started understanding it. And in Canada, there is no world. So in the U.K. in 2014, they brought in a version of that called the Employee Ownership Trust. I'm uncovering a lot. I'm pretty much all of these questions right now. How did you get the social capital? And now I'm into like, this is the third question. This is why I don't go to classes. I just talk too much. So anyway, I'll finish on this and then pause. There is Employee Ownership Trust in the U.K., brought in 2014, has seen unbelievable growth over the last decade. We don't have that here. And that's what caused us to start working on Employee Ownership Trust here in Canada. No, I mean, this is the whole point of this talk here is the importance of broad-based ownership for a bunch of reasons, some of them very obvious. And one of the things I really have admired about your work is the advocacy efforts and just trying to, quite frankly, help us catch up. So maybe you could just talk a little bit more about the trusts and the recent tax incentives. And I did have a question about our recent election, but we could go wild on that. But let's just talk about this new mechanism that is available. And I think it's tied in also with the Silver Tsunami. And so I know it's going to be a long answer. No, I'm fine. Fine. And then we'll... Unfair this time. It felt unfair. Okay. Go for it. So Silver Tsunami. We were hearing about the Silver... Everybody knows the Silver Tsunami, what we're talking about? Yes, absolutely. Okay. I thought I covered this way back in August, but you don't remember anything from then. Anyway, so go for it. Do you remember anything from August? Only specific items. Very specific items. Okay. Silver Tsunami. Silver Tsunami. So when we started that strategy in 2006, one of the rationales for that was this thing called the Silver Tsunami, which is the idea that the demographics were shifting such that there were a lot of baby boomers who were going to be selling their businesses over what is always the next five to 10 years. It was the next five to 10 years in 2005. It remains the next five to 10 years in 2025. They still own a lot of those businesses, so I feel like the Silver Tsunami is one of these things that people talk about that never happens in as complete a way as they are expecting it to happen, but anyway. But it is definitely true that the ownership of the business world is largely boomer owned, and they are eventually going to die. And on their route to dying, they need to sell these businesses. So that was the thesis in 2005, and that remains the thesis today. So there is lots of commentary about what do we do about all of these businesses that are going to be sold? Who is going to buy them? Are they going to close? What is that going to mean for the economy and for unemployment? And so the Employee Ownership Trust is a succession model. So in the U.S., there is one as well. So when people normally hear employee ownership, they think about stock options. That's the primary thing that will come to mind. Okay, great. I get to own a few shares of my company. It grows over time. I get to make some money. That's great. And it is great, especially in the technology world where that has led to some good outcomes for lots of people who otherwise wouldn't have access. Very good. The other thing people think about are worker co-ops. Also good, where businesses are owned by people in cooperation and who then make decisions in cooperation and then share the outcomes. The innovation of the ESOP in the U.S. was to conceive of employee ownership not as minority participation, but as a succession option. So if you were saying, I own a business that has 100 employees, 200 employees, 50 employees, whatever it is, and I want to sell that business to my workers, what is the mechanism for doing that? How do you make that work? And there was no mechanism. It's quite complicated. You can't sell them all shares unless there's a management that has access to lots of capital. They can't buy it. You know, generally, workers don't have any extra money for anything, never mind buying a business. And so this idea of broad-based access to business ownership required some method. And so what the ESOP invented was the trust-based model. There's a trust that then owns the shares on behalf of employees, but they don't own both those shares. They get to participate in the financial aspect without overseeing governance. So if you were the owner of a 200-person manufacturing plant in Topeka, you wouldn't think about selling that to a worker co-op because you've had this version of governance for whatever, decades, generations. And so switching that on a dime would feel weird, and businesses are going to be the ones that pay you back out. If I own this thing and I want to sell it to my workers, they don't have enough money to pay me, so we need some kind of arrangement where the cash flow of the business pays me back over time. So I say, okay, my business is worth four times cash flow. I'm going to lend that money to this trust. The trust is going to buy the business on behalf of all of its workers through, you know, with a bunch of governance stuff figured out on that. And then over time, the business will pay me back my four times cash flow, and they do it with interest. And then I get what I want, and maybe we involve a bank, who knows, and the employees then own it. So these have invented that. No one else did it in any other country in the world for 40 years. And in 2012, the U.K. said, well, this is a really interesting thing they're doing in the U.S. What's our version of that? So they had a commission to figure it out, and that commission said, what we want to do is this thing called the Employee Ownership Trust, which is similar to what you've done in the U.S., but instead of, and now I'm going into way too much detail, which, as you can see, is something I do. Instead of it being the employees have a retirement plan, so they work, they work, they work, and then they get paid out when they leave. And here we're going to organize it so every year when we have extra cash, that will go out to employees as kind of a constant flow of income. And when they leave, they leave. They don't get any money, right? They just get profit sharing along the way. That's the U.K.'s version of the Employee Ownership Trust. It's not a registered retirement plan. It's much simpler to get into all of that. Both of these things are tax incented. So in the U.S., if you sell your company to an ESOP, you can defer your capital gains tax really forever in the way the U.S. works. And when you die, you don't pay it. It's just as a feature of the U.S. trust law and whatever, or income tax law. In the U.K., you just don't pay income tax, or pay capital gains tax. So if I own a $200 million business in the U.K. and I sell it to an Employee Ownership Trust, I pay no capital gains tax on that sale. So that's been obviously great. And there are reasons for that, which we'll talk about. Sure. So that has gone really well. It went from zero to where now it's like 2,500 employee-owned companies in the U.K. All have to be more than 50%. In the U.K., these are all majority-owned companies. And so we started advocating for a version of that here in Canada, which was passed in law in June of last year, 2024. So we now have Employee Ownership Trusts in Canada, and we have a $10 million capital gains tax. So if you sell more than 50% of your business to an EOT in Canada, you don't pay the first $10 million of your capital gains tax. There are issues with that because it's time-limited, which you may or may not get into, but that law is only in place until the tax incentive is only in place until the end of 2026 to see how it goes. So we still have more advocacy work to do. But that exists today, and there have been two of them so far, but it's early days. So yay, Canada. We're the third in this race, although the Jets won last night. So we have three Canadian teams. What am I referring to? Which sport? Go Oilers. Oh, we can tell. We'll see the divide across the country here. Yeah, hockey. But I digress. So this is incredibly important as we will finally see boomers selling their businesses and keeping these businesses in local communities and employing people in those local communities. So I thought it was incredibly important that we have a discussion about this. Now, is there any downside that you see to the trust and maybe how things will roll out? Well, before I go to the downside, I skipped over. My partner, Bill, is much better at these talks. He's got like a routine, and he hits all the points along the way. I tend to fly all over the place and miss the points. We haven't really talked about the benefits. So in the US, they've been studying these things for 50 years. There's a center at Rutgers that has been around for 30 or 40 years that's studying it. And so we know that employee-owned companies lead to more productive companies, higher growth companies, higher wages for workers, better benefits, keeps jobs in local communities. Because the alternative, and I should say, the reason why we got interested in this was because if you are looking to sell your business, the typical alternative is I'm going to sell to a competitor, leading to more monopoly, or you're going to sell it to a private equity fund. Both of those outcomes are not particularly good for the economy. And so we need an alternative to that, and that's what the Employee Ownership Trust provides. It says if you're looking to sell your company and you don't want to sell it to your competitor or to a private equity firm, here's another thing you can do. And if you sell to an Employee Ownership Trust, you're not going to leave. So if you're in Winnipeg, for example, and you get purchased by a Toronto-based company, what's happening to the head office jobs? If you get purchased by a private equity fund out of California, what happens to those head office jobs? If you're purchased by the employees through a trust, they're going to stay. And so that's what politicians got behind. These people stay Canadian, they stay rooted in their communities, and they have all these other outcomes. Do they have negative outcomes? Well, they're not going to be for everybody. It's more that they are going to be somewhat limited in their application. So in order for you to want to sell to an Employee Ownership Trust, you're generally going to be paid out of cash flows. You might get some funds from the bank, but you're going to be contributing some of that yourselves. So you need to know that those cash flows are going to be stable long-term. So there needs to be a clear condition path. You need to be in an industry that's likely to have stable cash flows, that has cash flows. So technology companies are not particularly good for Employee Ownership Trusts. And so those industries, there are some of them loose, but it's not all like that. And then, of course, you as an owner need to be comfortable getting paid over time as opposed to what's left. And so even in the UK where you pay no capital gains tax at all when you sell to an EOT, it still only represents somewhere around 10% of all transactions. So EOTs are a great answer, but they'll be limited in their application. If we can get to 10%, that's a big number and worth doing, but it will never be 50%. Cool. Okay. I have more questions, but why don't I stop there and see if you folks have any questions. Yeah. How does governance or succession work? So the governance is a little complicated. The structure at the end, once an Employee Ownership Trust owns it, is that there's a trust that is the owner of the business, and then there's the business. The trust has its own board, and the business will have its own board. The board of the business is the one that runs the business day to day, like it always has. And they will have to hire COs, all of that. The trust, of course, it reports to the trust, and the trust can make decisions that say, well, we don't like the way the business is going, so we're going to force your board to hire a CO or whatever. So there's kind of two levels of governance. Primarily, the trustee should be responsible just for allocating extra cash flow. So the board says, we've got this million dollars of extra cash flow that goes to the trustee to say, okay, how do we allocate that? And then there are formulas that are established at the beginning on how that's allocated as So there are three different ways to allocate extra cash flow, either hours worked, wages, or tenure. And so most of these will be wages. So if you make $100,000, you get X dollars out of this profit sharing. If you make $50,000, you get half of that, some version of that. So those employees need to have at least one third representation on the trust board. There's no employee requirement on the regular board. So the way it should work is that the company continues to run the way it always has run. If it starts to abuse it, and it reports to a producer, right, which is responsible to the beneficiaries, which are all employees. So there's no reason for the board not to operate in the best interest of the workers over time. But if they do, then the trustee can say, well, you're operating not in the best interest of the workers. Does that make sense? Yeah. Are there general structures to the election of the board? Like if they're voted on by the company, or you can just bring in someone outside, that someone... Yeah, so it's an appointed board. Typically, they will likely be, and this is what we know from the UK. So the previous ownership can only have up to 40% of the votes on either board. So there's a limit to how much the previous owner can control the company going forward, which avoids some of the fraud problems you might have given the tax incentives. So a typical structure would be your trustee has two members, five person board, two people from previous ownership, one employee, and two independent, or one or more employees and two independent. And then on the regular board, you'd have your two former employees and your new CEO, and then a couple of them. That's normally how it would be structured. And then you'd plan succession in the same way a board would normally plan succession. Yeah, it's such a great transition back to a different type of ownership. What do you mean? Like if they're an ESOF, they've been running as an ESOF for 25 years. What if they want to sell? And then do they want to, like, have you seen a trend where they continue or, you know, move back to private? Yeah, it's a great question. So in the US, there is sort, it's got to a point of stability and it will be different in Canada. But in the US, there's a point of stability where about as many ESOFs are created every year as are purchased. Right? So if you're, you can buy an ESOF owned company, you just need to make a really good offer that the trustee thinks is in the best interest of those workers. Every year, about $5 billion of, you know, proceeds go to workers through a sale of an ESOF in the US. In the UK, it's been less like that. There are tax reasons why that's true, but fewer companies, almost no companies have been sold out of the US, even in its early days. I expect over time, Canada will be somewhere in the middle where they will be purchased. Right? And in the event of a purchase, then you can have a different formula for allocation. So if, let's say you're an employee of an EOT owned company, so you're an owner of the company, someone buys your business, it's not super fair if you've been working there for four years and you make $50,000 a year and someone who just joined yesterday making $100,000 a year gets twice what you get for a sale of the business. And so that's when you would work in tenure into those formulas. So people can get different incentives on how long they've been there. But for sure, we do expect EOTs to be sold out of EOTs if it's in the best interest of the worker. Okay. Other questions? Actually, just so we can capture the, we can pick up the actual question, because we're recording this. Sort of two questions. One, you kind of heavily hinted that manufacturing, probably services, I guess, are prime starting businesses for this. Yeah. I can't see how a tech firm would go through this. Yeah. So just can you confirm, like, that's really what this is targeting? It's certainly unlikely to be. Tech has other mechanisms of sharing the wealth, which is great. There are the five, let me see if I get this right, primary industries that tend to use this in the U.S. I'm saying more words so I can try to remember what those industries are. But if light manufacturing, distribution, retail, professional services and construction. Did I mention construction first? No. Then those are the five. Then the second question is, is there, like, a prime employee size for this? Like, wouldn't want to go to the hostel of, like, two employees. But if you're at, like, six, seven thousand, then there's probably different structures. Yeah. Yeah. Great question. So, yes, there is. And generally it's somewhere between, like, 30 and 200 tend to be where 80 percent of these transactions occur. As you say, smaller than that becomes administratively irritating to have all of that structure and you maybe can't handle it. Larger than 200, the price point tends to go up such that the EOT can't afford it and still pay back its debt. I think the median in the U.K. is something like 70 and the average around 120. In the U.S. slightly bigger. Any other questions before? There we go. Yeah. Could you just elaborate on why tech companies, it wouldn't work. I kind of get why, but if you could just. So, cash flow. So, if you are self-funding, essentially, when a business is purchased by an employee ownership trust of whatever form, they are, it's essentially 100 percent leveraged transactions. Right. No capital is coming in from outside sources. Very rare for capital to come in from outside sources. So, the only way to finance that debt is through cash flow. Tech companies rarely have cash flow. It depends on where they are in their maturity. If they're a large technology company that's been around for a long time and is profitable, you know, then maybe. The valuation is the other issue. So, I think in our work on this and through our work in the U.S. where we work to finance these transactions, which is how we got to the Taylor-Cardin deal, we learned a little bit about, and you can model this out on spreadsheets, it's not like you have to be a genius to figure it out, but the multiple that makes sense. Right. Once you get above six times cash flow, it becomes really hard to model out debt repayments in a way that ends up being okay for the business. Right. So, they survive coming out. Unless it's a high-growth business and a cash-generated business, once you get above that multiple. So, there's lots of industries where that's not a practical multiple. Right. Where businesses trade at 10, 12, 13, whatever it is, tech is one of those. I have a question about the tax. Right now, we discussed that different countries have a different treatment for tax. So, for a company, do you see any case, like, because the tax decision makes her thinking about to set up the upper limit to the, like, Canada company and have the holding structure to the U.K. company to enjoy the tax? To be honest, for the decision-maker, they definitely need to take into account. Are you an accountant? I have a certain background. Okay. So, the reason why this is a particularly important question is that in the U.K. that happened. So, there were some U.K. EOTs where they were structured offshore, right, with an offshore owner, using the, I think, they've got the Channel Islands. They've got a bunch of these tax havens somewhere, somewhere between the U.K. and France that I don't quite understand. Jersey and Guernsey. There it is, right, Jersey and Guernsey, like Freddie and Fannie. And so, they were structuring them such that you're able to kind of engineer a private equity transition, but get all the tax money. And they have recently changed their laws to prevent that. So, and the Canadians followed suit. Well, actually, sorry, the Canadians did it first. But in conversations with the folks in the U.K., they knew that this was a problem. So, the trust needs to be residents in Canada. It cannot be owned offshore. And there are also requirements on a Canadian residency of the employees. I think it's 75% of the employees need to be Canadian residents. So, a bunch of work has gone in. And it's pretty, they did a pretty good job of designing it so that it is very hard to use it for fraud, which was very important for us. Other questions before I get back to my list here? Okay. Yes. Let me get to you with the microphone. Can you elaborate more on the repayment structures for the employees when they purchase into that trust? So, the employees in an EOT aren't paying any money for their shares. And this is like an important aspect of the U.S. and the U.K. version, because the only way for it to be a useful tool for broad-based ownership is if you don't pay. Because otherwise, you know, certain people will be able to afford it and certain people won't. So, it won't achieve any of its objectives. And so, the, and that's why it's 100% leverage, which is all of this creates advantages and disadvantages. Employees are able to put in capital, then spend more money buying the company, et cetera. Anyway, so, it's 100% leverage. And so, you have to pay that debt out prior to the employees being able to access much of the benefit, which creates some challenges, right, and creates some sort of planning questions, right, and maybe coming back to the negative. The way in the U.S., because you benefit by ownership, right, where when you leave the company, that's when you get paid. If you're an employee on day one, you start to build shares right away. In the U.K., because it's profit share, if you're there on day one, you may not see any of the proceeds, right, because you're paying down debt for the first, whatever, five, six, ten years of the EOT's existence, and there's not a lot of money left over. So, they call it the first generation problem in the U.K., where that, you know, maybe the people you want to reward the most don't tend to have access. The way the Canadians designed it, you can do both. You can do a share allocation, and you can do profit sharing. So, there are ways to reward those employees from day one. But to answer, I think, the question is you have to pay off the debt first, right. So, it usually takes between, whatever, four and ten years, depending on how much money was paid, to pay off that debt, and after that, that's when cash distributions can occur to workers. For those who are accountants, or who like accounting for reasons of your own, the Canadian one was cleverly constructed in that the distribution of cash, whether it's through a capital sale or through dividends, retains its character to the worker. So, if it's a dividend, the worker pays dividend tax, which is lower than income tax. If it's capital, the dividend gets the capital gains tax deduction, so pays about half of labor tax. So, employees now will benefit from the same type of tax advantages that usually are only reserved for wealthier people. Okay. Any other questions? All right. Does each employee, like, depend on the seniority of this and a lot of, like, share? Or is this shared based on, you know, like, the CEO or the manager, like, above? Yeah. So, it depends on the formula you choose to use. So, if you want it to be, and this is, and by you, I generally am talking about the seller, right, who will normally at the very beginning set up how the trust works. If you want to be as egalitarian about it as you want, you can use a formula based on hours worked. So, your CEO probably works the same number of hours as everybody else, and so they all get the same. Another formula is using the wage. In that case, the CEO gets a lot more than everybody else, or you can use tenure or those things in combination. One of the very good things about the Canadian legislation is it's halved the wage that you can use for the wage formula at two times the highest tax bracket, which I believe is something like $440,000, which, of course, is a lot of money, but in some companies, the CEO is making two, three million dollars. That incremental amount is not, you cannot use that for the purposes of recalculation, which is good. The U.S. has a similar law, the U.K. does not, and then if you choose to distribute, you know, shares, you can do that using tenure or a wage. So, you can, it's really a choose your own adventure in terms of how it gets allocated. Does anyone know, that's like a book from the 80s, Dating Ourselves. They were good books. Just kind of picking up on some of the more detailed questions, the tax part of the EOTs is new, but EOTs have been around for a while. Yes? No. The whole thing? The whole thing is new. So, advocacy is a wild ride, to be honest. It's been a really interesting four or five years figuring out how all this stuff happens. So, the EOT structure came into place in, on June 20, 2024, through a bill that was the budget bill from, the second budget bill from 2023. The tax incentive came into place also on June 20, 2024, through a separate bill, which was the first bill for the 2024 budget. Where the advocacy comes in is, it was originally targeted at tax incentives to happen, this is, I don't want to get so boring, but I don't want to say anything. It was targeted for the second bill from 2024, which had two problems. One, it was going to happen at a different time from the structure, which means the communication was going to be weird. Say, hey, you have this structure and eventually you'll have this tax incentive, it was going to be hard to communicate. And the other is, there was a reasonable possibility that the government was going to fall before that second tax bill occurred, which it did. So, we spent a lot of political capital early in 2024 saying, okay, you've got the tax incentive, this is great, this is what we needed, you've been reluctant to do it, but please, please pass it in the first budget bill and not the second, otherwise this whole thing falls apart. We didn't say because we think the government is going to fall, we're talking about the government. So, you know, you guys will be fine. Anyway, we focused on the communication, which worked and it won the day, but because it was the first bill and not the second bill, there wasn't enough time for the accountants to take a look at it and there are some problems with it, which we are working on now when it comes to holding companies and some other challenges. So, the law exists, there are some challenges with it, but they've both been coming into place on exactly the same day, two different bills. Well, I can only imagine the work associated with that. It's crazy. Can we go back to the sort of the silver tsunami or lack thereof? Sure. I mean, what do you think the barriers are to small business owners in those industries that you articulated in really taking advantage of this? Because it's pretty good from a variety of different reasons. Is it just that they're unfamiliar or what's the work involved in the transaction like this? I mean, there's a ton of work involved. You know, I mean, there's a ton of work involved in every, I don't know how many people have been through a sale transaction. They're really complicated, whether you're selling to someone else or here through the trust. It's different, but complicated. But if you're selling anyway, the EOC isn't any more complicated than selling to somebody else. It's just different and requires maybe a different type of preparation. I think there's lots of barriers right now to this having widespread adoption, right? First is nobody has any idea that it happens, right? So that's the challenge. So there's like an awareness issue. There's a financing issue. So even if everyone knew about it, for some people, the idea of getting paid over time is not okay, right? So that will limit some people from doing it. There's an industry challenge, as we've talked about before, based on the question from up at the top there. But there's also a policy problem. And the policy problem is the expiry of the tax incentive. There's a couple. There's like details, like the holding company thing that some people have said, I definitely want to do this and then realize that they hold their shares through a holding company and that the law has made a mistake around how that works. So that's an issue. But the expiry of the tax incentive at the end of 2026 is a major problem. And it's a major problem for two reasons. One, if you're working in the advisory field, you're an accountant, you're a lawyer, you're a business broker, how much time and effort are you going to put into learning how this thing works when in now, what, 19, 20 months, there's going to be a lot less reason to do it and these deals take a long time to happen. So that so that is a problem both for people knowing how to do it and also spreading awareness. And the second, you know, for the business owner, if I start down this path and I don't think I can get it done by December 31st, 2026, then I'm not even going to start. So I think we need to solve these policy problems first before we can really focus on awareness. You can never have those policy problems. So lawyers just said, this is awesome. Accountants said, this is awesome. Let's spread this as far as we can. We're not there yet. There are a number of people in Canada who believe this to be awesome, are investing ahead of time. Bank of Montreal has built a whole group focused on, on this, on this topic of employee ownership. In Canada, they have a very large ESOP lending program in the US through their acquisition of Harris Bank, whenever they did that. So they understand it. They've hired a great team to do it. There's a company in B.C. called Rewrite Capital, who is, works exclusively on helping transition to employee ownership. So there are people across the country who are really into this, but it's not going to be as widespread as it needs to be until those policy issues are resolved. All right, before we take a break, and maybe this will go over the break when we come back, new government. I'll just sit. New-ish government. And go. Times and go. But, you know, this came in during the previous regime. Yeah. And do you think Carney's going to get it? Well, you know. Be fair enough? When we were talking yesterday, he said. Oh, yeah. I was going, wow. You are so plugged in. You know, we were at the down with Webster concert. Yes. And so, look, I don't we don't know yet. There are a number of people within government who were the ones who made this happen. Right. Who some of those folks will still be working in this version of this government. And so that, I think, is positive. There has been bipartisan support for this. Right. So I believe strongly that a conservative government would have been very supportive of employee ownership. It aligns with a whole bunch of things that they care about. And they look at it from a different perspective, but still are positive in the US. Both the Democratic Party and the Republican Party are huge supporters of employee ownership. Republicans, it's more about local communities. And, you know, kind of there's a freedom element to it for the workers, which they love and wealth generation or the Democratic Party. It's more about a broad distribution of ownership. Access to wealth for people who don't otherwise have access. That same thing plays out here in Canada. In Canada, however, there's more alignment around two aspects. One is keeping businesses in their local communities, which are important to both liberals and conservatives. And the other is and has become even more important is the sovereignty aspect. These companies cannot be American. Right. They have to be Canadian. And so there's a renewed and we had an op ed in the Calgary Herald. If you told me I would want to have an op ed in the Calgary Herald, I would be surprised by that. And I am surprised that there it is around sovereignty, right around this being a element of protecting Canadian businesses from being acquired by Americans in a time where we are heavily exposed to that. So I think there's a lot of reasons why it plays well to whoever is in government. And I think there are some advantages to the fact that there are some folks in there who are likely to be supportive. I think the very basic one is the fall economic statement that did not pass back in December would have had some elements that would have helped with some of the procedural challenges. At least we believe there would have been. So hopefully those are just moved on to the next budget bill, which wouldn't have been the case in the conservative government. But all that said, I think, again, the conservative government would have been supportive as well. Okay. Let me throw it back. Other questions from. I'm just wondering from the legislative side of this, if they're the tax incentives finish in 2026, is it possible that the government can go back and say, like, oh, we don't really want to have this employee ownership trust like available and get rid of the structure as well? Yeah. I'm like, yeah, would that impact businesses that possibly did it and then they have to backtrack? I think very unlikely. I think there's no good reason to get rid of the structure. The issue will be that once if the tax incentive is allowed to expire, then just no one will use the structure. Right. So the thing that we when we started the advocacy back in 2020, we said, look, the UK has had all sorts of versions of this forever. Right. Literally forever. And no one ever used any of them until they brought in the tax. So we know that if you're if you're the owner of a business and you said, OK, we want you to sell it to your employees because it's good for the economy, it's good for your workers, it's good for all this stuff. And you get a halo effect. Wow, this is a really interesting thing. You get very little of your money up front unless you've got a bank involved. And even then you get maybe 40 or 50 percent up front. So hang on a second. I know this is the only thing I'm ever going to sell. And so, you know, it's a nonstarter. And that's what happened. The tax incentive was required to say, OK, we know you are giving up something to do this. We know that you're doing it in the best interest of your workers, the country, et cetera. And so we are willing to provide you with this benefit for all of the outcomes that it creates for the country and the communities within. And those are well-documented outcomes. And governments are just super excited and they get to go to the ribbon cutting and say, well, you are now the owners of these things. But it also is, you know, real. Right. So in the town in Manitoba called Altona, which is about 100 kilometers north of the mainland, actually, of the U.S. border. And there is a company there called Freezens. And so for all of you who have had yearbooks of which some of you have had lots of them, Freezens is one of the main producers of yearbooks in Canada. It's Freezens or Jostens. And so 600 employees in this very small town, 4,000 people live there, 600 of them are employees of Freezens. They are an employee ownership trust through their own version. They kind of made it work, even though there was no legislation, they just made it happen that the people in that company wanted it. And so that's what's happened. The CEO of that company tells me that every week he gets a private equity offer from the U.S. every week. Right. It's like it's not a monopoly, but it's not a logopoly. So, you know, but it's still a very good company. It employs all these people. And he said, if we were not an employee ownership trust, we absolutely would have sold this business. No question about it. And these 600 jobs would simply be gone. They would have taken the manufacturing to some other place. As it stands, last year they gave out, I think it was $5 million in profit sharing to their, you know, 600 employees an average of $8,000 a person. You can imagine how far that goes in El Toro, Manitoba. He has employees from, I think, 33 different countries. It's just a wonderful story of Manitoba resilience that we want and need more of. Right. It's just like if you're looking short term, well, we can't give up $10 million. Fine. But like you will never have businesses in our communities who exist to benefit those communities and their workers. So we have to make a choice at some stage. And last government made that choice. And I'm hopeful that that continues. OK, well, on that note, it's time for a break. So let's take 15 minutes. We can chat amongst ourselves. We'll come back a quarter after. And I've got a few more questions slightly related, but different direction. OK. Yeah. Oh, this is a possible succession plan for firms. So. Is that working? Yeah. No, no, no. All right, folks, welcome back. I hope you all availed yourselves of the cookies and squares that were there. And James has another prize. Not a prize. Not a prize. Did anyone lose a bracelet? Oh, there we go. Yeah. Yeah. There we go. Thanks so much. No, I think we're good to go. OK, folks, a similar similar format to this morning. So, again, we are lucky enough to have John until the top of the hour. And what I thought we'd do is maybe shift the conversation slightly, although there'll be lots of time for questions as well, and talk a little bit about anti-monopoly work that you're doing, which I know is a huge topic. And we were just catching up about not so much monopolies, but oligopolies in many of our industries, which are very problematic. So, tell us a little bit about the work that you're doing on that front. So, stepping back, I guess, to the things that cause us to look at wealth and equality and employee ownership trusts, I mean, underlying that is the dominance of finance in the economy today. And, you know, the private equity interest in veterinary that I described, underlying that is just an increase in capital pooled looking for returns, which leads to bad outcomes when it gets a few steps away from the actual operations. And that is also happening in the, you know, as finance gets more interested and more involved in a bigger part of our economy, finance chases monopolies. Right. So, you know, Warren Buffett, who I guess was hired yesterday, is famous for talking about moats. Right. And a moat is monopoly power. That's what it is. It's pricing power. And so the finance's obsession with finding those opportunities and growing those opportunities using both finance and, you know, public policy power has created, you know, certainly in Canada, also in the U.S. and many other places, an environment where it's really difficult for small business to succeed, where consumers are continually grinded away. I started calling it grindonomics, which is kind of how the economy works today. The economy is really about how do we grind out less, you know, more from our clients and grind away at labor rights and grind away on behalf of capital. It happens in little ways all over the place. And I think for anyone who has a streaming service role and looks at what they're paying for those services today versus what they were paying five years ago, it's crazy. Right. What, you know, how much is being grinded away. And so if you want an economy that broadly benefits people and is innovative and is able to continue to support new business and the growth of small and medium sized enterprises, you just cannot have one that is organized in a bunch of different monopolies. In Canada, you know, if you're a small business, you're faced not only with your competitors who are largely going to have a lot of pricing power, but you're going to be faced with an insurance industry that is oligopolistic. You're going to be faced with suppliers. Your supply chain is going to have some oligopolies in it along the way. And so your costs go up, your margins go down and it just becomes untenable. And so a few years ago, about 10 years ago, I'd say in the U.S., you started to see an anti-monopoly movement begin to become relevant again for the first time in probably 50 or 60 years. It's really interesting to trace the history of American anti-monopoly, the anti-monopoly movement in the U.S. or anti-trust movement in the U.S. Canada is super boring, right? We sort of like don't care or haven't cared. I'm probably overseeing it, but it's some version of that. And there's a book that's super accessible, written by a Canadian who happened to have been very influential in the U.S. called Tim Wu, who's from Toronto. And he wrote a book called The Curse of Bigness, which is an accessible 130, 140-page book about how industries have become monopolized in the anti-trust movement. So it's worth the read. It helped my understanding. If you really love it, you can move to Goliath, which is a 400-page book that's really hard to read, but also really interesting, more detail. Tim Wu, stick with Tim Wu. Anyway, so that movement started in the U.S. and in Canada started to grow a little bit in the last five years, right? This recognition that Rogers, the banks, all of the different versions of oligopolies that we see also has stuff that you don't see, like meatpacking and trains and other wholesale distributions, and obviously Loblaw being the prime example of a monopoly here, or at least having oligopoly power here in Canada. The idea that they were able to buy Shopper's Drug Mart without challenge is insane, right? It is insane that we allowed that to happen. And in today's world, we wouldn't, right? If you imagine Loblaw trying to buy Shopper's Drug Mart today, the government would push back hard and it would probably cause that not to happen. They probably wouldn't even try. But when they did it 15 years ago, there was no real opposition. So I've been really interested in this as it comes to, as we think about economic structure and how do you create an economy that has better outcomes for more people. There is a small group of heroes who have started working on this, you know, guys like Kelvin Vester, Bas Ben-Nar, Robin Shaban, you know, not very many of them, but they were the ones that started writing articles in Canada about this, and I managed to get connected to them. And Kelvin created something called the Canadian Anti-Monopoly Project, which is a worthy follow. And, you know, he asked me to join the board of that. So it's a very small board, it's a very small organization, but we are trying to build a similar movement here in Canada to be, to be like what they've done in the US and in the UK and in Europe. There's something called the Counterbalance, I guess it's called, in Europe that talks about these same issues. But it's all part and parcel of the needed and very difficult effort to fight consolidation. You know, and you look at what we're up against, like, you know, I went to a legal, a meeting of lawyers who wanted to talk about anti-monopoly stuff, but 95% of them would get most of their money from murders and acquisitions work, right, or competition policy work on behalf of the largest companies in the country. So it's really difficult for them to come out and say this is wrong. And of course, they get, you know, drip by drip by drip, convinced that they're right. And monopoly is good and big is beautiful and all of that stuff. So it's been really interesting work. I feel it's like super important work, very hard work, and we're up against a lot of power. I find it interesting in the U.S. that the antitrust, and they have strong antitrust legislation actually, is really ratcheting up. And going after Google and Chrome and all of the big companies. I mean, and the Europeans are all over it as well. Yeah, if there's a couple of legacies of Biden's four years, one of them will certainly be the increase in antitrust in the U.S. So there's a woman named Lena Kahn and a couple of others, Jonathan Cantor is one, I don't remember the other one, but there's three of them essentially who were given reins of the Department of Justice enforcement activity in the Federal Trade Commission. I think I'm getting those things right, but if I'm wrong, someone can say, or the podcast will make me look silly. Please start checking afterwards. Yeah, yeah, please. Yeah, yeah. This is where you got this wrong. I like pop-up video, again, dating myself. So, and they just took on everybody, right? You know, Amazon, Google, Meta, you know, people that, you know, companies that needed real enforcement. And they killed a grocery merger, Albertsons and someone else, Kroger, Albertsons, Kroger, they killed that. Really important work that hadn't been done in decades in the U.S. And the rise of like big is beautiful and let's consolidate everything happened, you know, in that kind of Reagan era, right? Where government sucks, whatever government wants to do is the worst, let's crush it all. And, you know, that movement started then and it worked, right? There was a judicial revolution in the U.S. It started a little bit before that, but, you know, they really reinforced it where they just didn't challenge anything. And, you know, we've seen that happen in the U.S. and Canada sort of followed suit. Canada had something, and this will either be boring or interesting, as I guess all things are either boring or interesting, but Canada had something called the Efficiency of Defense, which, and the way I worked in Canada is in Canada's competition act, it said as long as the merger between two companies led to at least $1 of efficiency, it could not be challenged. But there's an actual part of the act. And so you'd have these, the government would challenge a merger, and you have all sorts of reasons for employees, consumers, communities, why this was a bad idea for Canada. And the defense would be, yeah, well, it creates $1 of efficiency, so go screw yourself, essentially. And it worked. There have been no successful challenges of a Canadian merger, I think, ever. And so they have recently, the last government in the sort of near the end of its mandate, did start to focus on this and got rid of the Efficiency of Defense, which is a big win for this anti-trust movement in Canada, because it was a crazy thing that existed here and nowhere else. That was a Canadian-only rule in support of big government, or big corporate, and consolidation that led to a lot of our old office. Sort of part and parcel with that, and then I'll open the floor up again. You know, we have entrepreneurs and innovators in the class here, and a large part of getting what you want or need is advocacy. Can you talk a little bit about what that looks like in practical terms? Like, what do you have to be able to do? How do you connect with people? How do you, and this is really your question, what does that look like? I wish I could tell a good story about advocacy. So I've had two real connections to it, right? One through, well, actually, sorry, three. So one is the monopoly work, another is Employership Trust, and the third is the rent relief stuff in the pandemic. And the rent relief is probably the best story, but it required a global pandemic for it to happen, right? So this thing happens, and government's coming forward with some pretty crappy suggestions on how to save small business and people from the impacts. And a few of us wrote at the time, this was mid-March 2020, the real issue is rent, right? So all my employees are being furloughed, they're not paid for by the government. I have no customers because I'm closing because you've asked me to close, so I'm going to go and do that because I think it's important. And I'm not ordering anything anymore. So my only problem is I have this rent to pay in this place that I'm not using. And so if you were to help me with this rent problem, everything else is working, right? People are getting paid, no one's ordering anything, no one's coming to Black Mesa and get this stuff online, whatever it is. So I cannot, this rent is the problem. But they didn't do that first. They found other, they gave loans, right? So they created this program called the SEBA loan, which meant we didn't give you $40,000 to get you through, but you had to pay it back. So the idea is we could not possibly ask landlords to do anything about rent, right? How dare us? They've got a mortgage to pay. Well, we can get into that, that's fine. So we're going to give you this $40,000. And what did all of that money go to? Rent. So landlords are fine. But all these small businesses that were now saddled with this additional debt that they had to pay back. So we started this campaign around commercial rent relief. So how do we need to reduce the rent? And 38,000 small businesses joined this movement in three weeks. And it was a crazy, like, we had this, the woman who organized the technology in Vancouver, her name is Erin Miller. And she, with incredible foresight, organized the signing up to this as a Google Doc, or, you know, where the intake included stories, right? What, tell me about your business, how many employees, how long you've been there, what's going on. And it was like, I get emotional now even talking about it. We had these, like, Google Docs, which were just populating every second with these terrible stories from around the country of their 50 year old businesses being crushed, right? And they would never be able to, they're going to go bankrupt. And so it was, it was incredibly powerful. We are we, you know, again, through Erin's direction, gave a lot of the stories to the media, caused some really good coverage. And eventually, we were able to get a commercial out of the first one was really bad. When it was Morneau, he was the worst, Freeland came in, she fixed it. So you know, we talked about all that. But it was like, a program that then eventually succeeded in providing debt to a bunch of not debt, to reduce the rent directly without providing debt to a number of I think, a million odd. And I get that number, it's probably not a million, but a lot of small businesses around the country. And so that was great. And that didn't require a bunch of money. Right. So that was an almost free advocacy. So the reason I mentioned that is it's a contrast to Employership Trust, which was extraordinarily expensive. And that is a problem when it comes to advocacy. It is really difficult to get in front of policymakers with ideas, even if they're amazing. And once you're in front of policymakers with ideas, it then goes to bureaucracy, which generally is trying to keep things from changing, right? Not not for like malicious reasons, but more like, it's a lot of work, they already have a lot of work to do, they are focused on a risk aversion rather than, you know, kind of outcomes. And so the cost of like, we needed government relations help, we needed help designing policies, we had to pay some lawyers for that. We needed, you know, to get into the media, so we had to pay some media relations company, and then we had to spend a lot of time. So it was super expensive. We haven't tabulated it, but it'd be a half a million to $1 million of real dollars and time in getting that policy established, which is terrible, and felt bad at the time, right? Initially, we dropped this report, we said this report, we're going to meet people on it, the report is strong enough, the recommendations make sense, we're gonna, you know, this will be enough. And nobody would meet with us, right until we hired a government relations firm to help open those doors. And that felt dirty, and weird, and uncomfortable. But we thought it was important enough to do it. But it just means that advocacy is not entirely, but it can be exclusive, which is terrible. So it's hard. One more question I like earlier, before I throw it over to the folks in the room. You're very active on LinkedIn, prior to the recent election. So, which I, I thought was an incredibly powerful way to reach people, get conversations going, and get some attention. So, do you think that's a legit way of moving the agenda forward on any given item? Yeah, I mean, for sure. I mean, it's just another form of social media. I can't do the other ones. No one, they don't like me on the other ones. They sort of like me on LinkedIn. I don't know why that is. I go on too long, and LinkedIn allows you to do that. So maybe that's why. And I actually wasn't that active in the election. The one thing, think about the election, I was trying to steer clear of it. The one thing, it doesn't matter. It was a long thing. It's always long. That's what I'm saying. It's a good thing. It's always long. But no, I mean, look, it's been super powerful for me, and some of these issues, like employee ownership trust stuff, all of the advocacy support for that, or all the kind of public support, came through LinkedIn. So people do read stuff. If you're genuine and thoughtful, I'm not saying I'm those things, but if you try to be genuine and thoughtful, and it happens to work, you can build, but there's risk to it. The moment you start looking like you're a, well, sorry, the moment you start looking like a partisan, you probably get a bunch more followers, but the conversations become much more dangerous, and your ability to move people's opinions goes away, right? You'll reinforce people's existing opinions. I don't know. I'm not like a social media person. This is just how I've experienced it, how I experienced the use of LinkedIn over the last while. I'm happy to talk about that. I find it really interesting. It's something I never thought I would be doing, but over the last three or four years, it's been a very useful tool to shape conversations by itself. Okay. Back to the floor. I'm assuming, as a person, you have your political biases, where you lean towards. So how do you reconcile that with the actual work that you do? I think I've lost a little bit of my partisanship over time. I don't know. You kind of get disappointed by different people at different times, and you start like, all right, well, maybe just try to focus on one thing and see if you can do that. I've had great conversations with people from all sorts of, from all the parties. So I don't consider myself a partisan anymore. I obviously have beliefs that lean towards a broader distribution of wealth throughout the economy. I think there are more conservatives with similar beliefs these days than there have ever been before. That used to be like a kind of a socialist thing to say. There's this growth of economic populism that has sort of come out of the U.S., that's a little bit here in Canada, that I don't think made its way into the conservative platform this time in the way that I expected it to, that I think is interesting, right? So where there's an anti-elite, anti-corporate, anti-big, you know, sort of big agenda that I think aligns in a lot of ways with some of the more economic populists on the left, like Bernie Sanders. So I see some conversion. The problem is the folks who have been leading that charge on both sides have used it in a weird and untenable way. I mean, you see in the U.S., like Donald Trump, I'm getting into politics now, which I probably shouldn't, but Donald Trump used populism as a way to get into office, but is setting fire to economic populism in a way that might never work out, right? So whereas you might have seen some green shoots of interest in broadening wealth and reducing concentration of capital among Republicans, how they go back to that after this approach to tariffs, I don't, like I get why Americans want more tariffs, and I get how you could have a really interesting strategy that probably included Canada and Mexico that said, hey, you know, we need less Chinese goods for a while while we rebuild. I mean, you could have seen that, but this is not that. And so I don't know if it will recover, but I was really interested in that. So as someone who cares mostly about broadening of ownership throughout the economy, that's the thing that I care most about. I was seeing it coming from all different directions, and I'm hopeful it can find its way back to that after whatever it is we're doing. Hope that makes sense. Okay. Other questions? Have we got one here? Yeah. First, and then, okay. I know you had earlier spoke about kind of before raising a lot of awareness around EOT with like small businesses that you need to kind of fix the policy issue. My question is, you know, should we be refocusing on that and raising awareness so that they are kind of helping you in pushing that policy effort forward? That would be ideal. It's really hard to get people. So employee ownership is one of those things where if you have a conversation with someone about it, by the end of the conversation, like, well, that seems like a really good idea. We should do that. But it's a hard thing to get people to pick it for or write letters for. It's not that kind of policy. I was talking to someone in the break and, you know, about, you know, that this would have been a really interesting policy for the liberal NDP coalition. They could see why it happened. And to which I responded, I doubt they ever had a conversation about it. Right? Employer ownership trust was like the 129th priority, and it was like, it's not the end there. And so I'm like, oh, fine. Like, my guess is the reason it got into the budget was something like, oh, fine. Right. It wasn't like, let's go do it. So I think, unfortunately, it's hard to get that kind of energy behind it, although it would be super helpful. A lot of it is going to have to be inside baseball stuff, you know, and the threats, which is like the least I hope the podcast is probably bad for this, but it's like the least credible threat in the world, where we say you screwed up the employer ownership trust policy publicly, and I go, good luck with that. I'm sure that will move votes. So I think it's tough. I think we need to we need, if we're going to succeed, it's going to be because folks in the Ministry of Finance understand why there are barriers and are interested in solving for that problem. And whoever happens to be government, when we, you know, when it comes up for renewal or when they decide to keep it or not keep it, believes that it's worth doing. And they're going to have to believe that on their own because it's going to be hard to organize political pressure for that. My question is, I know that the Canadian employment force is heavily unionized. And so the EOT structures, what is the reception level of the unions regarding this? Yeah, it took longer to get to unions in this conversation than normal. Thank you for bringing it up. So neutral is what I would say. If you're, I think there's, so generally, employer ownership trusts come into place in companies that are smaller than would often have a union. Sometimes they do, sometimes they don't, but usually they're not ready to unionize. So I think they see it as a separate thing. And in the event that a unionized shop is, becomes an employer, so trust them, there'd be some sort of cooperative approach to figuring out contracts or because, I mean, you're essentially fighting yourself at that stage, right? Like that's, so it becomes a weird. So I think for unions, like, well, it's a bit awkward for us because, you know, we exist in order to battle management for better outcomes for workers. If ownership is us also, then it becomes an interesting challenge. It does work in the U.S. in a number of companies where they're both fully unionized and fully employee owned, so it can work. And I think unions recognize that this is good for workers, right? It's good for Canadian workers. So to be opposed to it would seem weird. So I think it's sort of a neutral approach to it, if that makes sense. Yeah, for now. Yeah, yeah. And I would assume supportive over time, right? Like solidarity, man, like, you know, you're not part of the union, that's, you're still a worker somewhere. And, you know, this is good for you. You'd assume solidarity would apply to them. I think it will. I'm sort of steering things back to the anti-monopoly and antitrust laws. And I'm just curious, I think, like, as we're entrepreneurs looking to get funding and working with VCs, a lot of that is about, like, your exit strategy. And how could these maybe antitrust laws affect us in being able to get funding in any way, because it could limit our ability to exit our businesses? I mean, if that's the approach to the VC world, then we've got a whole host of other problems, right? So I think it's kind of both, because you can't grow your business unless there's an opening to grow your business, right? If the industry you want to go into is dominated by an oligopoly, then you don't have anything to exit, right? So most of the folks in tech tend to be on the anti-monopoly side, especially the fintech world, where they run up against the banks. You know, it is a weird industry, a new sector in which the objective is to sell to someone big, right? And I, you know, I think it's a shame that that's how funding works. I think there are some, but it is how funding works, and I recognize that it is. So I don't know. I think that if we were successful enough as anti-monopolists, such that there was no money left to buy any promising tech companies, then that'd be a great win, right, for the country. It is unlikely that we're going to be so successful that we'll shut down the ability of Meta and Google and whatever. I mean, unless you become WhatsApp, and then, you know, sure. But like, the smaller acquisitions will probably still be okay. I mean, not okay, but we'll still be doing it. But don't sell it. Just run it. Make some money. You know, it's okay. I think you're all just finishing up the financing new ventures course, so this is very topical. It is weird, though. It's just a fantastic question. Is that new ventures financing course, is the terminal dollars or whatever, is it always focused on a sale to somebody else? In that particular course, because it's heavily venture focused. Yeah, but so there are lots of ventures. What's that? Yeah. Peter and I sound like we have an argument. I mean, there are lots of new ventures who bootstrap their way and then actually get dividends, and those people become very, very wealthy because they created real businesses that exist over a long period of time. That's better than this other thing. If you have to do this other thing, do this other thing. But man, if you can create a business that produces dividends, both the power that you then have as a person and the ability of your company to make life better for lots of people just dramatically changes. And I think the reality is when you look at the venture capital industry, most of the companies have bootstrapped for years before they actually take outside capital. So it's interesting. This is my friend Bryce Tishak. I'll post a link to his talk, but it's called Founders Play Your Own Game. And he's just talking about the whole venture industry and how problematic it is. And I actually think it's problematic because there are fewer and fewer and fewer buyers. Whereas 20, 25 years ago, there were lots of midsize companies that could buy your small company. But now you just have a small group of people who might be interested. It's such a weird problem because if you think about the use of private capital, a venture is one of the best uses because the money that goes in is mostly going to fund people's labor. There's a lot of this computer power and all that stuff, but a lot of it is labor, which is much better than using it for private equity, where you're buying something and you're likely going to have less labor at the end of the day. So it's great. But if a policymaker is going to say, I really want to encourage venture capital, but everyone who builds their own company is just going to sell it to some American. It's a frustrating problem because you want to pour all sorts of public policy at increasing venture, but the exit becomes problematic. Is it, you know, does that then recycle enough that it's okay? Maybe. Right. And I would certainly like we had this massive fight last year on capital gains tax. I don't know if you guys followed it, but it was wild the way the tech sector responded to that shift. But I mean, if you think about the things that we try to encourage. So I mean, for those of you who don't know, capital gains is taxed at half the rate of labor in Canada and everywhere else. Right. So it's the same policy pretty much in every English speaking Western country. And you're trying to encourage capital formation investment. But there's so many different things that happen in there. Right. So house flipping happens in there. Dealing less than selling shares that he's owned for 50 years happens in there. Private equity happens in there and venture capital and a number of other things happen in there. Some of those things we want to encourage and some of those we really don't. Right. And the fact that we apply all the same brush to all of that, I think, is one of the silliest approaches to public policy that exists. We need to find a way past that. OK, I'll sneak one more in before I go back to the floor. So we've just had back to this, I think, consequential election. What are you expecting the government to do? Really do as it relates to helping small business creation, employee ownership, all of those things. I don't think I have that on the list. I know. And I'm not I don't know that I'm a useful person to comment on it. But like I would expect it to be entirely focused on building homes and negotiating with other countries. I don't expect there to be a ton of other stuff happening in the short term. That's a lot. Right. And if they succeeded the building homes thing, no one's going to care about anything else. Right. That is the most important thing we need to do to fix inequality in this country. So hopefully I'd almost say hopefully they focus on that. Maybe there's a little bit of time spent on this other stuff. But that's that's the big issue. So, I mean, I have relatively low expectations for engagement and a broad set of topics, not and not and not in a critical way. There's just a bunch of other stuff going on. Not sovereignty. Well, no, that's the negotiating part. Right. So, I mean, I think, you know, the. This is going to get into other views of mine, but, you know, we've spent a long time tied to the U.S. and it has become, I think, unclear to most of us where we're going with that. Right. The longer we're where we continue to tie in, what do we do in our climate change? What are we doing on inequality? What are we doing on any number of issues that we think are important? And we're getting relatively poor. Right. So versus the U.S., every Western country other than Australia in the last 40 years is performing at about 20 percent, 20 to 40 percent in Japan, like 5 percent. So like 20 to 40 percent worse than America while they run global trade. So, you know, they're mad about it, but maybe we should all be mad about it. And so I think, you know, if we spend some time focused on what is a different alliance that excludes the U.S., that allows us to form some sort of other power bloc with the U.S. and China, I mean, if you look at the 10 countries, the five biggest countries in the EU and the five biggest countries outside the EU that are not the U.S. or China have about the same economic power as in the U.S. and twice as many people. It includes Australia and Canada, which are, you know, huge resource based economies. So there's all sorts of stuff that we would have access to that we could use to have a different approach to these types of global issues. And, you know, if you look at, like, one of the crappiest things that happened over the last 20 years is the moving of all tech companies to Ireland. I don't know if you guys follow this, but Ireland decided to have zero tax. And so as a result, every tech company, Apple, Microsoft, they're all meta, they're all there. And that's just like shitty tax competition, right? That's one country saying, we are willing to accept zero tax in exchange for your money. Has that worked for Ireland? Well, their per capita GDP is pretty high, but their home housing costs all of it. You can't afford to live there. I think if you ask people there, a lot of them will want to go back to how they were before. But then it also had this major, like, overflow effect to the global economy where those, that tax base is now gone, right? And that's where so much of the profit is held today. So we did this global minimum tax thing where we all agree we're going to have minimum tax is now 15% across the world. The U.S. has yet to sign on to that thing. What if the U.S. decides to be zero tax? What happens then to the rest of us? So we're just in this precarious, like, position, hanging on with our fingernails to see what the U.S. does next. And it's like, it is worth a massive swing to not do that anymore. Whatever that swing entails, even if it works out badly, I don't, where we're going, I don't think it's very good. So hopefully this government will focus on some new approach to engaging in the world. Well, I think it's going to be a wild few years where, you know, we just wait to see what happens and there'll be opportunity to solve problems. But it's, yeah, bigger risks, bigger returns, all of that. Okay, we got time for a couple more questions before, okay, we put John back onto the 401. Can you just speak to, like, how you guys got your advocacy money? Like, more at a granular level, or you're just like, hey, you got half a mil, but... I mean, it's a little bit of that, right? So Bill, who founded SEP back in 2001, endowed it with a certain amount of money that was supposed to last 10 odd years. The endowment did better, so we're still going. I contribute a little bit to our funding. And so it's all Bill. It's Bill, and then a teeny bit from, that's where it comes from. I shouldn't say it. There were other, there were five other participants in the advocacy who contributed some money. And they were, so BMO was one of them. A group called Raise Recruiting, which is just a guy who thinks employee ownership is good, who runs a recruiting company. It was Freezens, the company I talked about before, in Manitoba, and Rewrite, the company that's built in the OT practice. These companies that, we didn't want to, like, have this big expansive group, but those were the five, that's where the five people who put the coalition together, and that financed a lot of it. Okay. I'm wondering if you can share maybe your short-term and long-term goals that you and your partners have in this space, whether it's finding new creative ways to incentivize, or is it really policy and advocacy based? Well, SAP, we've shifted our, we used to be focused on, you know, financing and coming up with models that could be used by the private sector to have different outcomes. And it was pretty successful, and included the financing of Taylor Guitars, but we've abandoned that now, and are only focused on narrative change and public policy. And that was coming on the backs of this EOT work that we felt like that was the most important use of our time. So the, we are still working on what the next big project will be for us. We don't, we don't know what that is. So this is from a social capital partners perspective. And we'll work on the narrative side. The CEO of SAP recently put out a video about GDP per capita, which is one of the most misused metrics out there. I think the title of the video was something like, are we really poorer than Alabama? I don't know if you've seen this meme out there, but there's this ridiculous chart that has all of the American states and their GDP per capita, and the Canada's at the bottom below Alabama and Missouri. And like, dude, if you've been to Alabama and Missouri and Louisiana, you know that this is not an accurate portrayal of the wealth of these places. And so of course, it's stupid. And it's like, and there's lots of reasons why GDP per capita looks the way it is, you know, it's important that we, you know, grow and succeed and all that stuff. But it's just a really dumb meme. And so he went after that pretty successfully. And so that kind of thing is what I hope we do more of, kind of challenging some of the assumptions that exist. And you know, you get a CEO of a company says something, and it's just accepted, even though it's dumb. And so we're going to try to identify those dumb things and call them out for being dumb while finding a decent project. With employee ownership, we just, it's all advocacy, we have to fix the policy. And then from there, we built an organization called Employee Ownership Canada, we have a new CEO. So that's working and going, we fundraise for that. So that's great. But if we fix the policy, we think there's a huge opportunity there with education and awareness building, that can grow employee ownership. I do believe I followed that conversation. Oh, About the Alabama GDP was very entertaining. So dumb. I think one of the posts started with dude. Are you kidding me? So anyways, all right. Time for one last question. These have all been great. Okay. This back so that we can capture it. Hi, I think half of the students here may be all from overseas, and we're from different cultural backgrounds. But mostly, I believe we're from emerging countries. So before I came to Canada, I believe the Western world, like the English speaking world, you have the market system depends on the legislation and the more like, how to say, be called to more, how to say, fair, you know, if you're saying that, because in some Asian countries, like from Mongolia, we do have the parliamentary system. But the thing is, it was a high bribing problem. And we do have some other issues. But now, after this Trump Tory problem, and also your lovely election results, now what I'm seeing is more and more Canada becoming like nationalist, you know, towards that. Do you think that might affect because I'm not very understand the Canadian political background in the history of ways. So do you think that in coming few turns, does it going to affect this market, how it's going to run? Like, it's going to go to, like, we can't say it's communist way, but it's somehow going to quite nationalist way, right? Oh, wow. Sorry. No, no. I hope I asked the wrong. Yeah, I mean, there's so much in there. I think the idea that we have had fair markets is hilarious, right? Like, we have not had fair markets, we have free markets for capital, right? But we don't have fair markets. And we haven't been, I don't even know if we ever have, but we've had various, more free and less free for people to compete. So I think your observation that we don't have that is fair. I think the sovereignty thing is going to be real for a while. And I think that's probably overdue, to be honest. You know, the, there's been sort of an economist led, you know, we are better producing cheese, you're better producing wine, so let me trade my cheese for your wine, or I don't know if I got that backwards, but whatever, is just a false way to think about the world. Like, it's, you have people who are already producing cheese, and they do a good job. And if you just say, well, now you can find a job being like a kitchen repair person, right? It's like, well, no, I know how to make cheese. So I think that there'll be, we're in a period of transition, where I think that common, like, free trade is always good, is going to be halted for a while, which will affect economies around the world. I don't think we realize yet how it will affect ours. But unfortunately, I think it's the right, we went too far. And it affected too many people in too many communities, and probably took way too long to realize it. And that, you know, we're seeing the results of that with Trump. So I think, I think you'll see sovereignty movements in a lot of different places, play out for industries and economies in ways that will drive Orthodox economists absolutely crazy. But too bad, we had too much power for too long. Keeping out of foreign investment? I hope so. And I say that because FDI is also completely misunderstood. Right? So if FDI, everyone's like, we need more FDI. Well, great. If you're building a factory in a town, good, that's useful FDI. If you're buying our company, it's not useful FDI. And we and the two things come into the same bucket. So do I think Canada needs piles and piles of more FDI? I don't. I don't. We have all sorts of money here. We use our money elsewhere. And so I think I think it would be a good thing for a sovereign movement. And this may be controversial in this class, I don't know. But for a sovereign movement to start to limit the amount of FDI we encourage, unless it is directly benefiting people in key. All right. On that note, John, thank you so much. We have some. Yes, thank you. So I look. One of the biggest challenges with employee ownership to get back to that is that doesn't get talked about in businesses. Right. And so it's a very viable form of ownership that never gets a word. So I appreciate the fact that you're willing to talk about it here in this class. So thank you. Yep. We will all support. OK, thanks. And we have a few goodies for you. You know, they all say Queens. No, they all say Smith and Queens underneath. No, they say Queens. We can get you Queen Smith. Thank you. All right. Thank you. Thanks, everyone. We'll see you back this afternoon.