'Promoting steward ownership and evolving governance structures are crucial steps towards creating an economic system that operates within planetary boundaries.'

BOTH by Ring Capital Issue #23 — Interview with Eva Gladek, Co-founder & CEO @Metabolic

Dear community,

In this interview with Eva Gladek (Co-founder & CEO of Metabolic), we delve into governance models, with a particular focus on steward ownership.

Let’s start with a definition: steward ownership is a model of corporate governance in which control and profits are structured to prioritise long-term impact over short-term financial gain or shareholder profit maximisation. It is “guided by two core principles: 'profits serve purpose' and 'self-governance.'", Eva explains.

In concrete terms, this governance model puts the company’s purpose and operation in the hands of “stewards” — individuals or organisations committed to maintain the company’s core values rather than focusing solely on financial performances. Moreover, value created in the company can’t be extracted by the shareholders: it is reinvested and/or shared with employees to sustain the company’s mission.

So, why opt for such an alternative to shareholder value primacy? I don’t want to spoil the entire interview, but the challenge is both micro and macro: aligning profit with purpose and creating an economic system that operates within planetary boundaries.

And the reason we wanted to highlight this type of governance is because, at Ring Capital, we've gone through a similar process of questioning how to align impact with profits, making sure that the mission we've committed to is visible across all aspects of our activities and serves as our guiding principle. Following this reflection, we decided to become a purpose-driven company, a French legal status that applies to companies that have defined a social or environmental purpose in their articles of association.

At the end of the day, our belief is that all companies should do the same. Because reflecting on the change we aim to create and the impact we aspire to have as a company is a vital process that deepens all the stakeholders’ understanding of the company’s purpose and fosters their commitment to collaborating with us to fulfill this mission.

🫵 Which entrepreneur, solution, project or concept related to impact would you like us to cover in this newsletter? Feel free to send us your ideas!

Could you introduce yourself, your background, and your company Metabolic?

I was born and raised in New York City to economic refugees from communist Poland. My parents escaped from behind the Iron Curtain, believing in the promise of the capitalist American dream and the fact that it could deliver meritocratic reward. My observation, however, is that it’s something that doesn’t really deliver for most people. And that’s part of the reason why I’ve become interested in new governance models. 

I started out my career by working in laboratories when I was a young teenager. I got a degree in molecular genetics and had a wake-up call from all the data around environmental sustainability and inequality issues. This led me to shift my focus from pure science to something that could influence societal outcomes on a larger scale. After working as a science journalist for ABC and NBC News, and Discovery Network — still feeling too far removed from impact — I got another degree in industrial ecology. That’s where I felt like I had arrived at some sort of intellectual home because it was science-based but also looking at how one could drive systemic transformation.

I moved to Rotterdam, where I co-founded a sustainability consultancy. At a certain point, I got frustrated with the limits of what a consultancy could do and founded Metabolic about 12 years ago with the aim of driving large-scale systems change. Metabolic is not just one organisation; it’s a group consisting of a consultancy, a research institute, a venture-building entity, a software company, and a foundation.

What’s a steward ownership governance? How would you define it?

Steward ownership is guided by two core principles: 'profits serve purpose' and 'self-governance.' The first ensures that profits generated by an organisation are primarily dedicated to furthering a greater purpose. That doesn’t mean that entrepreneurs and investors cannot acquire a clear return, but it does often mean that those returns have a cap on them and at some point profits flow back into the mission of the enterprise. The second principle mandates that the control and decision-making remain in the hands of those closely involved in the day-to-day operations of the company, preventing it from drifting away from its mission or being managed by absent shareholders. At Metabolic, we’ve also been contemplating additional layers, particularly how such a governance model should aim to drive positive impact globally, offer incentives to entrepreneurs within the organisation or close partnerships outside of it, and what legal frameworks could embed these ideas more firmly within our structure but remain practical and which others could replicate.

 What led you to consider this kind of governance? Were there any companies that inspired you to make that change? 

The consideration of steward ownership arose from a more fundamental reflection on economic models, which often prioritise wealth maximisation at the expense of societal and environmental well-being. Traditional ownership structures in a venture capitalist system tend to encourage a 'growth at any cost' mentality, leading to adverse outcomes for both people and nature across value chains. But even when the outcomes are not that bad, when we reduce an organisation to seeing it as simply a vehicle to generate profit, things like the purpose, the employees, the community, the product, all quickly take a back seat to optimising for that metric. 

So we started looking at ownership structures (and incentives built into those structures) to find levers to move toward a different economic model where growth and value are not only generated for the sake of wealth itself, but directed, and legally directed, toward purpose. We experimented with different ownership models, including a cooperative structure, which didn’t work for us. We also went into a more traditional holding structure, which wasn’t reflecting our ideals around new incentives and new ownership models. 

Eventually, steward ownership presented itself as an interesting basis for further reflection on our governance and ownership model. We were also inspired by all the work Purpose (a German-based organisation) was doing to further and mobilise around that approach. And it’s interesting to consider that steward ownership is not a new idea. A really famous example is Zeiss, a German manufacturer of optical systems. It has been a steward-owned company since the 1800s. So is Carlsberg, the Danish brewery. So is Bosch, a German producer of appliances and tools. And it’s clear, at least to me, that this model has contributed to their success, allowing a clear alignment with a bigger purpose. 

What's the process to become a company with a steward ownership?

I think the first thing we have learned is that it very much is a process. Steward ownership is really a set of principles, and they can be translated in various different ways. There are different financial models and legal models to consider, and sometimes those depend on the country an organisation is in. There’s also the personal principles and ambitions of the founder(s), as well as the type of organisation being built. These are all important factors, so it really is a process that requires some reflection and conversation. 

We undertook a long research process on the different models and explored within ourselves to clarify our needs and goals. Ultimately, the process to become a steward-owned company – at least if the organisation is already established – also involves legal and tax specialists to create a structure that meets all these objectives within practical confines. 

What are the main constraints for a company with this type of governance?

There are some constraints certain types of companies (or entrepreneurs) should be aware of. One example is fast growing tech companies; while I would hope they opt for steward ownership, it simply becomes more challenging to raise funding. The number of financiers interested in such a model is growing, but it’s still relatively nascent, and so entrepreneurs who expect to require a lot of capital in multiple rounds of investment may take pause that it simply will make things more difficult for them. But taking the harder path and a principled approach is also how these things change and become more mainstream. 

Beyond that unique class of enterprise, I don't think it's particularly constraining. I believe it creates a fairer and more transparent system for both investors and entrepreneurs. Steward ownership offers a system appealing to those seeking to align purpose and profits. It ensures that everyone involved has a clear understanding of the value they’re generating and the expected outcomes, which helps maintain focus on the company’s mission. It also allows long-term multi-generational value, not just in one dimension (that of capital), but in multiple ones (human, ecosystemic…).

How do you promote steward ownership, and why is it important?

At Metabolic, we actively promote steward ownership through various channels. We co-founded Fresh, a venture builder that has steward ownership as a core approach. We also participate in initiatives like the EU-funded SoTecIn Factory, which supports social innovation and alternative governance models. These initiatives provide us opportunities to engage with investors and policymakers, sharing ideas and demonstrating the benefits of alternative ownership models. Additionally, we produce thought leadership, case studies, and examples of how this model has worked in our venture-building activity and entities we have set up. We will also share our own journey, the results and choices that we’ve made.

Promoting steward ownership and evolving governance structures are crucial steps towards creating an economic system that operates within planetary boundaries. It’s about moving away from 'runaway cowboy capitalism' towards a model where resources are equitably, or at least fairly, distributed.