Conscious Capitalism NEO: A Conversation with Scott Meyers of Good Place Holdings
Note: The following conversation was originally recorded as part of Conscious Capitalism NEO’s programming
Bill: So I'm tickled to have Scott, I've known Scott for a couple of years, and he's going to tell the story of Good Place Holdings. I think you could say that you're the convener of Good Place Holdings-
Scott: The precipitating agent.
Bill: The precipitating agent, that's great. Well, so Good Place Holdings has three operating business, SDMyers, which is the sort of legacy business founded back in 1965. They manage and maintain large electrical transformers for big industrial sites. Then there is also On Now Digital, which is a software development company and has a SAS product geared towards electrical users and Redemptive Properties, which is a real estate management company focused on purpose or re-purposing properties. So that's kind of a description of what Good Place Holdings is. I think you should tell us why Good Place Holdings is?
Scott: Okay, good. Good evening. Good to be here, I talked to a bunch of cool people before I had a chance to get up here and missed talking to a whole lot more cool people. It seems like a great room, the night is young.
So I grew up in a family business. My dad started it when I was five years old, started in the basement and one thing led to another. It wasn't really my intention to work at the family business when I got out of college. I was going to read all the works of Western philosophy, comprehend them, make my notes, and then write the book that explains it all.
So as soon as I graduated, I got to doing that in my bedroom at home and my dad says, "So what are you up to?" So, I explained my program. He goes, "That's cool," he goes, "So how are you going to pay rent now?" And I go, "Well the cool thing is that I'm living at home in my bedroom, so I don't have to pay rent." He goes, "haha," just like you guys did. Dad said, "No. As of you graduating college, your bedroom is now going to cost you $250 a month." Which doesn't sound like a lot, but this was 1982, so I was a little bit more in 1982.
I started looking for what kind of job can you get if you weren't really looking for a job. One thing led to another, I got a job at the company working on the road, working on the transformers. Two weeks out, one week off. The weeks out were six day weeks, 16 to 18 hour days. Whatever kind of weather it was, whatever part of the country it was, you were working outside. I was working with these guys and it was all guys back then, we've got some women doing that now, who had been doing this for 10, 15, 20 years. I realized these are the guys who paid my college bill. They bought my clothes and they put the food on our table at home and I'm working with them. They said to me, "Scotty, when you're in a corner office remember us and how hard our lives are out here."
I assured them, "I'm never going to be in a corner office." They looked at me and laughed and they didn't say anything. So fast forward 15 years, I did end up in the corner. I fought it, it was empty, I said, "I'll go in any office except for that one." So I ended up in there. So really ... you know, Bill's going to ask about spiritual practices later.
I got a little intro to that, that I'll throw in later. But, really my first step on this journey was empathy. You know, with these guys that I worked with. Who were all cool guys, they worked really hard, they were fun to work with. They all were mission-driven. I'll say they all are mission driven.
It's interesting, just earlier this week we had a gathering that we call the TMI Alumni Instructor Group and it's people who worked in the company in the sixties and seventies and early eighties. We get together and share a fellowship. There's people who were in divisions we sold off and they went to GE and other companies. There were people who went and got other jobs, other places. There's people who retired and there's people that I fired. That the company fired who show up to hang out with us, they buy my beer.
Bill: What are they doing now?
Scott: Because we've formed this bond working together because we were mission driven on what we did. So I got sucked into the business, not because transformers are very interesting, which they are. I can tell you about that, but I'll save it.
Bill: We'll save that for another day.
Scott: We'll save that.
Bill: We'll need a longer session.
Scott: I can do a whole day seminar, just on one on one. But, it was the people that got me interested, that made me feel I need to step up into this role or responsibility that is just mine for walking into. Because I knew what everyone's working conditions were. I saw how decisions that were made at the leadership level affected them. How, again, from a leadership level where you got your plan, you're trying to execute your plan, you're looking at the income statement. I understand how decisions make sense from that frame of reference and then I understand what the outcome of that is in people's lives.
So that's really what my spiritual practice of empathy, which I didn't choose, I was wired with kicked in. That's what got me-
Bill: What about this mission orientation that you saw on the front lines many years ago? Made that a good place?
Scott: So my dad, who started the company, was a typical American startup where he had this genius idea that nobody wanted to work with him on it so he went and did it on his own. Everyone just had tremendous respect for my dad and for what he knew. Earlier this week they were telling Stan stories, Mr. Meyer, I went with Mr. Myers, this customer, that customer. So they had that respect, but he had that respect for them. He knew that their jobs were tough, but he treated them like they were very important. The guys who worked on the rigs, on the road with that schedule I had, they were the royalty in the group. The salespeople all respected them and we were saving the world's transformers and people don't understand that.
So to take all that out and go back to your original question, how did that lead to Good Place Holdings? Around that we developed a company culture that valued people and it was my intent to make sure that the company culture ramped that up. You know, we valued people maybe more than the next guy. You've all heard the story about the campers and the bear. You don't have to outrun the bear, you just have to outrun run the next guy and you're good. So we are outrunning the next guy, but I was not satisfied with that, there was a whole lot more we could do.
So I took where the business was when I got involved with leadership as the baseline. It wasn't like sitting on your laurels and going, this is good. How do we take this further? My older brother, who was the president for 15 years before me, he's a serial entrepreneur and our business got to be too boring for him. So he went off and it was something that was a more exciting adventure for him. That was 12 years ago when I stepped into leadership. He would do like mergers and acquisitions kind of stuff. He would see something interesting, he'd buy it, something he wasn't interested in, if he could get money on he off of, he would sell that.
I noticed that the culture that we had, that people value so much that they'd come to these meetings. Just quickly, I've got to give this illustration. This one guy only worked for us for three years. He comes to all of these things and he's just gung ho. I go, "George, how many places did you work before you worked three years for us?" "I don't know, five or six." I go, "How many have you worked at since?" "Five, six, seven, eight. I don't know, why?" I go, "Do you go to meetings like this at any of those other businesses?" He goes, "Psh. No. Why would I?" It's like, "I don't know, why do you come here?" So it's just the relationships before.
So when we would sell some part of the business to Safety Clean or General Electric or somebody like that, that culture disappeared instantly and they become cogs in the machine. So a couple of commitments, one, I don't want to sell any part of the business off. Two, I'm second generation and there's no third generation who's interested. As anybody knows, M&A people are just on the problem. Everyone is trying to grow through acquisition. You know, if you could fog a mirror, they're after you. We can fog a mirror? I mean, just me, you know we have a president who's in operations. You know, my real title is board chair and mind the president. Or he minds me or there's a mutual thing there.
I get calls and emails every day of somebody trying to buy a business. So my thinking was, how does this business go forward where we can maintain this mission and skipping over a lot of ... you know, five years of researching what's a form that this could go forward with that it would cradle this mission? At the outside I said, "Why does anybody have to own the business? Why can't we have a business with no owners and it's the mission?You know, the business is all about the mission?" Everyone kept saying, "Well, that's nonsensical. You can't do that, somebody has to own it." I go, "Why?" They go, "Just legally, somebody has to own it. Just trust us on this one."
Fortunately I had gotten involved with a couple of nonprofits in town, my wife Jean and I. You know, we've got different last names, we've got to out you, she married me. Now you've got to live with that. I'd help them get their 501c3 status, did all the paperwork for them. Then the first step is you incorporate with the state as a c corporation with no owners. Then after you're incorporated as that, then you go to the IRS and ask to get the 501c3 tax deduction, charitable organization status. So I finally said, "Why can't we just do what 501c3s do and just you don't go to the IRS for that part? You just be an Ohio Corporation, c corporation with no owners and you pay taxes?"
They said, "Well you can't do that." I go, "Why not?" They said, "Because nobody has done this. We've never heard of anybody doing that." I've got enough entrepreneur in me to go, "Don't say that, that's a reason to try it because nobody's done it." They're like, "No, trust us on this one. No one's done this, you don't want to do this." So I said, "Well, let's just do that and file a tax return and see if we get arrested." So we filed a tax return, we didn't get arrested.
One of the things that people have said is, "Well, you know if you don't have that profit motive for shareholders then the place will just fall apart, people work hard." But, one of the things that I've always said about any of the insights or purposes or ways that I talk about managing a business, a mission driven organization, none of them were really things that I'd made up. So they're all things that I've seen work and go, "Oh, this is kinda cool, let's do that. This works and it takes us towards this mission." So I've just accreted stuff that I have observed the works and maybe what I bring is just being more curious.
One of them is, again going back to the guys I worked with on the road, they were on a mission. When they walked into a plant, they held their head high. They said, "We're from SDMyers." Customers said, "You guys know this and we don't, take care of this for us." So they had that attitude. You got to pay people right. You got to treat them right. But, they weren't doing what they were doing because if they did it well, they would get a 25% bonus at the end or they had some stock option or something. They were mission driven, I'm mission driven. The best people I know are mission driven. One of the things that we did while my brother was president, so I don't know how many years ago it was, 20 some years ago. I talked him into getting rid of commission.
So for over two decades we've got a non-commission sales force because the people who are highly commissioned driven did not serve our customer flow. No, they were in it for their commission. They did not work and play well with others in the organization and they caused a lot of headache to the leadership who were trying to take the organization forward. While you're trying to go forward and you're like, “Okay, somebody tied my shoelaces together. What's this all about?" "Well, I talked to that customer too. We need to split the commission." "I didn't talk to the customer but their headquarters is in my territory."
So you have all these interlacing warfare that you've got to settle and all of that is not productive. It's not serving your customers better. It's not building up anybody as who they are. So we just have a lot of people who are mission driven and we set up an organization. We tell them who we are when they interview. So if they're highly competitive, highly money-driven, they look around and go, "This is not the crowd I want to hang out with." Looking at it as like a cell wall, the cell wall brings into the cell stuff that's healthy for the cell and things that aren't healthy, the cell wall kind of keeps out. So when you're clear on your values, people aligned with your values show up. People who don't align with your values tend to stay away.
So having had that experience when people said, "You don't have this strong profit thing go into drive people, your business is going to fall apart." It's like, you know, for 50 years I've watched it go fine without that. So that's what sort of came together and say let's set up this Good Place Holdings. That was the legal part of it and I can go into the social stuff.
Bill: That's a good question. Maybe before we go into the- So behind every conscious leader, there's some sort of personal practice in which they're working on themselves and they're trying to be the best version of themselves they can. For many people that is a spiritual practice and you're one of them. Spiritual practice can mean many things from meditating to strong faith in traditional religions. Tell us a little bit about that side of you and how it impacts you. I think to a larger degree, your father lived that kind of a lifestyle too.
Scott: Right. Yeah. So I can go a lot of different ways with that. So my dad's commitment when he started the business there were three characteristics he had when he started the business with you. One, he researched what the customers need, spent a lot of time on that. Second one, that he took an entrepreneurial risk. So we take entrepreneurial risks, we try to maintain a entrepreneurial spirit. His risk was he had three kids, his wife was pregnant with number four, he had no money, no customers, no insurance. He took out a second mortgage out on the house. So, you could do that in the early sixties. I don't know how many marriages you could say, "Honey, I'm going to take a second mortgage out. If this doesn't work, we're homeless."
Then the other one was he goes, "We're going to honor God with this company. We're going to live by biblical principles where we won't be ashamed of the name of Jesus." So that was sort of his formula when he got started. Over the years I was around a lot of people who were Christian business owners and saw how they operated and flowed. Again, they didn't want to lie, cheat, or steal. There's no of business that's worth buying, or cheating, or stealing for. So, you know, treating people with dignity and value. But again, I took all that as ground zero. Not to say, "As long as I just keep doing that, everything will be fine." How do you go past that? So through my own, you know, studying the Bible and spending time in prayer and meditation, what I've come to is that I think that at the highest level description to account for existence, which is what I was trying to do with my philosophy reading-
Bill: In your bedroom.
Scott: In my bedroom.
Bill: Did it get interrupted…
Scott: It did get interrupted, yeah. Philosopher interrupted. We're created to receive grace and transmit grace. That's the highest level description of understanding I have and that the purpose of grace is to develop parts of love in us. To build up ... and that our living in the world builds up Shalom and the places we live. Shalom is peace, things are right, there's balance, there's health. So we're to receive grace so that we can have that heart of love so that we have that life of shalom to where grace is transmitted through us. That the world is this environment, this machine if you will, that the transmits graced us and allows us to transmit grace to others.
So everything is a means of grace. Everything is a tool that God can use in our life to build up the heart of love and a life of Shalom and Shalom in the communities through us. The definition ... I taught junior high Sunday school for 27 years. So my junior high definition of grace is grace is when God does something for us or through us that we couldn't do on our own. One of the things that you hear from junior high kids a lot is, "I didn't ask to be born." Have we all heard that? Or said that? Or said that in that 13 year old range. We didn't ask to be born, so everything is grace.
The fact that we exist is grace. The fact that we can walk around on two legs is grace, walk and talk. Everything's grace, but part of it is there's grace that we can seek and participate with. The biggest thing I try to do is not play defense because God's tried to do good for us, God's trying to do good through us. A lot of times we're just too busy to let that happen. You know it's grace when something happens that you never could have pulled off on your own.
So Bill and I were talking about this, we were out in California after a session. We were talking about spiritual practices. I said, "Yo, Bill these consciousness people remind me a lot of baptists I grew up with." They're so into their thing, there's a very real chance you get wrapped around your own axis with your spiritual practice and not really be any good out in the world. That's what I like about grace, is it's not up to me, I can't do it. I can receive it, let it flow through me and that's when the really ... So coming here is a means of grace to talk to the people that I've talked to. Just hearing what you guys are doing is so encouraging to me.
Bill: Good Place Holdings is, I think in your mind is a vehicle for that grace. You know, it doesn't exist for the benefit of shareholders because you don't have any. Your long term vision is that it's part of sort of a positive reinforcing cycle with community. It helps to build community, it helps to provide living wages, which helps to build community. It's really ... becomes a part of an ecosystem or a part of fostering an ecosystem.
Scott: I got shivers just hearing you describe that Bill, it sounds so cool.
Bill: That's because I heard it from you.
Scott: It sounds good coming back. I know EPOCH Pi is that same kind of way too. So the words I like to use around work is that work is a means of grace and ... I never turned my ringer off. Work as a means of grace. The people who have the ability to determine the aims and the methods of the organization, as I understand it, their responsibility is to handle the work environment as the means of grace that it is. Which means that it's supposed to be a place where people can have love fill up in their heart. People can live out their own potential and that the work that we do makes the world a better place.
Oh, by the way, as you do that, you need to make a profit. Making a profit is not the mission of the organization. Making a profit is so that we can sow that, we can pursue the mission of the organization. Without the profit, you can't have the mission. A friend of ours in the Y says, "No margin, no mission." So no margin, no mission. So that's the purpose of profit. I spend my time on three things at work. One is the board or build up a policy governance support, so that for somebody to lead this after we're out of the way. Then with the leadership, on how to manage our mission driven organization. So that it is a means of grace in the lives of the people who work for us, customers, suppliers, and that it's a tool in the community to bring about the kind of places we wanna live in.
Scott: I wrote a little thing Bill called the Nonprofit Dilemma-
Bill: You should share that with us.
Scott: Which, basically does the math that average individual giving is 2 to 3% of income. Average corporate giving is 2 to 3% of profits. So let's be generous and say that all businesses have a 10% net profit at the end of the year. That they give away two to 3% of that 10%, it also makes the math easy. So we'll say ... and let's be generous, let's go to the highest side, let's say 3%. So if businesses donate 3% of their profits to nonprofits, who their job is to make the world a better place, that's 0.3% of what they do as actions are monetized.
So if you monetize their activity, 0.3% of that is dedicated exclusively to making the world a better place. If the 99.7% of the rest of what they do is just even, it doesn't degrade the environment, communities or people's lives, it's just zeroed out. Will get better at a pace of 0.3% a year. If the economy grew at 0.3% a year, you would not have the same president next term. But, we're willing to accept that with the world being a better place. If a business is totally money driven, I wager that they're not even. They do degrade the environment, they do degrade the communities, they work and they do degrade individual's lives driving them ... You know, one of our units we sold to a large fortune 100 company who shall remain nameless, who had a joking motto, "If you're still married, you're not working hard enough."
If I said the company, you'd know it. They have a high profile. They're only kind of joking, and people I know who exceed in that organization, they have a very high divorce rate. It's just open, it's just open. If you're really going to succeed here, you're going to have a hard time holding on to your marriage. So I can go way down that. So if I saw somebody reenact the founder of that corporation and I watched somebody embody the founder of that corporation, I go, "This is where it started." This guy started this thing, inherited it over a hundred years later. That character trait is still in this billions of dollar organizations. So I'm trying to play in a different seat, probably won't get to be that big. That's what we're up to.
Scott: So, one of the things that I think is fundamental to your beliefs is that the mission or the purpose of the business actually has standard, it has rights. It should be protected, it's almost, in some form a person. The citizens of Toledo voted in the last six months. Slavery was outlawed a hundred years ago, here it is back.
Audience: Bill, the other thing I've heard is that in Japan, they're starting to look at human rights for the people who are not being born yet.
Bill: There you go, well that's right. That's right. Yes?
Dave: Legal foot note, for those of you who don't know me, I'm Dave Nash. I'm on the board, but I work for the dark side of the force, I'm an environmental lawyer. This Toledo thing is very, very interesting. Whether nature should have legal rights. The co-founder of the corporate sustainability network that I work with for almost 20 years now - that's a big passion of hers.
Legally in Ohio, that's probably not going to go anywhere for a lot of technical reasons. But, I think for this group and others, frankly, everyone on the planet, in my view, it's very important because we have lost sight about what our place in nature is. So just a footnote in the sales pitch. We talked about that in Cleveland Marshall last fall, so if you want to audit next semester's class, please let me know.
Bill: But Dave, most laws start with some small action that gets overturned and overturned and eventually the supreme court rules on something.
Dave: It's funny how that works.
Bill: It's a beginning, but that's not my point. My point is this notion of a business having a purpose, this really underlies your whole theory of a company without shareholders.
Scott: Right, right. Which, is why I spent so much time on the board because they're the ones who ultimately have that responsibility to cradle that mission and vision in the future. They're going to hire somebody to secede our current president, because they believe that they can carry that out. So they have to really have that in their hearts. That's just something that they heard of, they're going along with Scott Force.
Bill: Maybe we can open it up to some other questions, but I think that's an interesting point. You know, there's a book that's out just this year called the “Enlightened Capitalist,” which is written by an academic. So it's at least two thirds longer than it should be. Zing.
Bill: It's a governance book. It details, not exhaustively, but historically the companies that had intentions like yours that lasted for a while, but then failed. Inevitably of course the root of the problem was they were forced to go public at some point and then money interests made them say, in any one point of time, "Stop doing that it costs us money." But, I think ... and then we'll turn it over. But, this governance issue is fascinating because certainly, like the book implies is that's a lot of work. Because you can have a charismatic leader, which you are. Which, you are. You look to be in good health, but you know, a hundred years from now you won't be here.
"What are you doing to protect this mission of the company?" Because even though you don't have shareholders, I can come along and I can buy your company if your board goes along with it. The money in Ohio not for profits, the money has to go to another charity. But, I can still buy your company.
Scott: Right, so certainty is a very interesting concept, I've kind of learned that there's not a lot of certainty available to us. You know, people talk about trying to be the hand from beyond the grave to control things. One of my inspirations for what we now call the Good Place Organization came from a reading about benedictine monasteries. Which, survived the fall of the Roman Empire when a whole lot of other organizations didn't. They had three functions that were part of their organization, they had economic activity to support themselves. They didn't rely on their nations. They educated their members into their form of how they operate. Then they provided service in the community where they were at.
I thought, "Wow, this is the perfect organization, education, economic activity and community engagement. So I took that as my model. So I studied how have these things functioned. So they're, you know, 1500 plus years, they still exist and the history of them is cyclical. They go through these periods where they get off track and then somebody is a reformer and says, "You know, this is really what our roots and values are. We need to be back on that." So they have a reforming era where they'd come back and they're reformed, they're good for awhile, then they get off track. So I thought, this is likely to happen.
So one of the things that I'm doing, which I was doing anyways, so this is kind of an excuse for me to indulge in this. I'm trying to capture it in writing and have my own sort of a rule of benedict kind of version of document that says, "Here's the purpose and here's the methods for this organization." You know, our President Dale, one of his things is, "Harvard started off as a seminary and now they're anything but a seminary." Just went through the same kind of list of organizations that got off track of the founders intention. I go, "Count on it. If it lasts for two, three, four generations somebody's going to get off track."
So you need to leave something that somebody can look at and go, "Oh, this is what we need. This is what it was supposed ...." Plus I want to get it out there so other people are doing it, it's not just us. So, you know, DNA tries to get out in the environment for ensuring survival.
EPOCH Pi is a Certified B Corp and investment bank that serves purpose-driven companies, companies that exist to provide both financial and social returns. Impact companies range from providers of clean technology and sustainable agriculture to old-line manufacturing companies that create meaningful work environments, have positive cultures, and treat suppliers and other stakeholders equitably. Our services range from capital formation for growth companies to generating liquidity for existing shareholders. In every case, one of our criteria is the alignment of our client’s purpose and vision with those of the financial stakeholders. At EPOCH Pi, we have developed a set of unique, proprietary assessment tools that facilitate cultural alignment in mergers and acquisitions. Learn more about us here.