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“I think it’s the most democratic (little d) form of energy because you can place it almost anywhere. Wind is great. Being in Texas, wind was super great. But wind is also a large-scale technology that you can’t make accessible to most people so I fell in love with it and it got into my blood. So as I like to say I may have studied liberal arts in college but I got in touch with my inner engineer afterward.” ~ Amanda Bybee, Namasté Solar
Energy and Business Democracy
My guest today is Amanda Bybee, director of strategic planning and initiatives for Namasté Solar, which is an employee-owned solar installation company. She started there in 2006 as employee / co-owner number 5. Amanda’s going to tell us about the benefits and challenges of running an employee-owned company and also how cool her job is. I’m a little jealous actually. But first I want to share something with you.
You’ve Got the Power!
I’m trying something new with the podcast this episode. Each show will feature a couple of energy saving tips. I’m hoping to use this as a way to inspire myself to start tackling some of the problems with my leaky old house. Maybe you can join in and work on your leaky old house too. I’m not going to give you a big mind numbing list of ways to save energy. Just a couple of ideas each episode that you can try out before the next show. You’ll feel good knowing that you’re doing something real about climate change, or air pollution or mountaintop removal or whatever it is that bugs you about fossil fuel. And we might actually save some money in the process.
This episode features energy saving tips related to dishwashing (click here).
Our Featured Guest, Amanda Bybee
AB: I’m Amanda Bybee, director of strategic planning and initiatives for Namasté Solar and Namasté Solar is a member of the Amicus Solar Cooperative.
DB: Okay, Namasté is not your average installation company right? Tell me how it’s different from other solar companies.
AB: That’s true. Namasté Solar is an employee-owned cooperative. So we currently have 43 owners and another 40 folks on track to become owners in the course of the next year.
DB: That sounds really exciting to me, since I do not work for an employee-owned company, but I’m sure there are challenges too. Forty three owners!
AB: To be sure. Forty three owners means you have forty three opinions on any given topic. But, we adopted that model in 2011 as a way to align our operational practices with our governance practices. And under a cooperative you have a fundamental commitment to the idea, one person, one vote. That was really important to us. We’ve always been an employee-owned company. And we’ve always had this sort of egalitarian ideal about the value of a person’s voice and about the value of a person sharing the risk, responsibility and reward of small business ownership. So for us to make that meaningful we engage people on decision making at a lot of levels. It’s not just when you vote for the board of directors but it’s also down to the little things on your team. We employ democratic decision making in a lot of different ways and fundamentally we also think that the cooperative model is a way to address that big wealth inequality that so often exists in our traditional business models. You don’t have much reward for the sweat equity of your workers. Workers generally get their salaries and that’s good, and if they’re lucky some profit sharing but by being an owner in a company you’re fundamentally building in a mechanism to share the wealth when that company does well.
DB: How many founders were there?
AB: There were three founders in our company, Blake Jones, Wes Kennedy and Ray Tuomey.
DB: So that’s the simple part. How do you bring on new employees and give them ownership in the company when you’ve had people that have been there longer? How does that part work?
AB: You know it’s actually been an interesting journey for us. I mentioned that we converted to becoming a cooperative in 2011 and prior to that we had a custom shareholder agreement that we had just written with a very creative local attorney. And, I actually think in hindsight that’s not a bad way to go. Because, starting with a mechanism that acknowleges the important of start up capital and the risk of start up capital as opposed to joining a much more well established company that’s in it’s tenth year of business. That gave us a way to acknowledge those early investments and appreciate them over time. Whereas today when you buy a share in the company as a co-owner it doesn’t appreciate over time. It’s just a fixed-price share and it yields dividends but it doesn’t grow in value.
DB: And now are there the same number of shares as there are employees currently.
AB: Almost. The one sort of exception to that is for a co-owner that leaves in a given year, they still retain ownership of that share although it ceases to accumulate dividends until the following year when the board of directors makes redemption decisions.
DB: So I realize you don’t have a standard or traditional company operating at the same time to do comparisons side-by-side but what have you seen as far as turnover, morale, things like that?
AB: Well I think turnover has been very low and one of the beautiful things is that even when people do leave, because they have an investment in the company, I think people tend to leave pretty well. So that you don’t have a lot of burned bridges. You know, when people leave they tend to give us extra notice. We’ve had several employees give us a full year’s notice that they were leaving, which has provided a lot of flexibility for the company to hire their replacement, get them trained, etc. So I think there’s been that residual impact that attrition when it does happen is very friendly.
DB: So you say when they leave they still have investment in the company but you buy them out eventually.
AB: We buy them out. So we actually have two classes of stock. We have our class A common stock and then we have preferred stock. And so class A common stock is tied to employment. When you leave the company redeems it. The preferred stock is held by external investors so if I leave the company I can still keep my preferred shares.
DB: That makes sense.
AB: An interesting tidbit about those preferred shares is they do not have voting rights. So they may be higher in the capital stack and get preferred treatment in the event of company sale or dividend payments or things like that but class A co-owners are the only ones that have voting rights. And that was a really important part of that conversion for us because we wanted to maintain that internal control. And that was a huge part of the structure that we set up because it gave us a way to accept that external investment without sacrificing that control.
DB: Yeah, that seems brilliant.
AB: It is brilliant and I want to give full credit to Equal Exchange which is another worker cooperative out of Massachusetts that sells fair-trade coffee, chocolate, tea and bananas, among other things. When we were in this journey to learn about cooperatives Equal Exchange played a huge mentorship role for us and was very gracious sharing their documents and structure. They’ve been doing this for 20 years. So we had a lot of confidence in the model that they had proven.
DB: What’s your job at Namasté?
AB: I am chief hole filler basically. I have the advantage of having been there. I was, I think, employee / owner number five. So I’ve been there through our growth and have held a number of roles throughout the company. Right now my emphasis is on strategic planning, especially as the solar industry is set to go through another dip on the solar coaster. And also working on special projects that will benefit us or our customers.
DB: The dip on the solar coaster that Amanda referred to was the expiration of the Investment Tax Credit that was looming at the end of 2016. However the credit was extended after this interview was conducted.
DB: So your tour of duty on the roof is, you’re past that phase.
AB: Pretty much. Not that I was really on the roof that much but here and there.
DB: Are you sad about that or are you happier to be doing strategic things?
AB: I love my job. I get to do lots of different things in the course of it. So while I may not be outside all day getting to do the fun part putting the stuff on the roof, I get to do lots of different things. You know I’m on different committees, I’m a champion for our B Corp certification and have gotten to do the re-certification process the last two years.
DB: Yeah, tell me a little bit about the B Corp. I don’t know, is that a type of entity in every state? I’m not sure about that.
AB: There are two commonly confused topics around B Corps. To be a certified B Corp means that you have gone through an assessment administered by the non-profit organization B Lab. Then there is an entity title call a public benefit corporation, which is a state-by-state designation. And it’s a state recognition of your type of business. You can be one and not the other in most instances. Although I think eventually to be certified by the non-profit you will also have to have the state certification. Colorado did pass legislation last year, although we’ve had a couple of snafus in getting it implemented so, Namasté Solar is not yet a public benefit corporation but I’m sure we will be someday.
DB: Are there tax benefits to that status?
AB: There aren’t tax benefits but there are other protections afforded to our board of directors. So when you become a certified B Corp you modify your corporate documents, your articles of incorporation specifically to include direction to your board of directors that they need to take into consideration a long list of stakeholders, and not just shareholders, that your business is trying to serve. So that includes your customers, your vendors, your partners, your investors, the company itself, they economy, and the environment.
DB: And you can specify those stakeholders?
AB: I think there’s a suggested list but it includes some combination of those groups. Oh, and the community.
DB: So for a typical person on a board, are they bound to always do what’s best for the shareholders?
AB: That’s sort of the conventional wisdom. That companies exist to create wealth for their shareholders. And in our case we just think that that’s too narrow and we want our business to be bigger than that, to have a bigger impact than that. And so while shareholders are certainly one of those stakeholders, they’re not the only one. And there have actually been cases in the past where shareholders have sued the board of directors for making a decision that compromised their return. And the legislation that’s been passed in Colorado, and I think 34 or 35 other states, protects the board from that kind of legal action.
DB: I can understand how you can make the case that standard corporations should exist to maximize profits for the shareholders, I mean that sounds pretty logical. On the other hand I’m not sure how that matches up with them having the right to free speech by unlimited campaign contributions.
AB: Well that’s a whole ‘nother podcast I think.
DB: Yes, I think you’re right but I couldn’t stop myself. So you have this co-op structure and employee-owned and you decide to extend that to another organization can you tell us a little bit about that?
AB: Sure. In 2011 we co-founded the Amicus Solar Cooperative. It is a purchasing cooperative. And the idea when we first hatched it was that we needed a way to answer the competitors who we were seeing in the marketplace who were very large national corporations. They buy large quantities of equipment and get the bulk discounts on their pricing. And being smaller than that and with not intentions to grow to match those large national competitors we looked for another way to address it so we formed the Amicus Solar Cooperative and as of right now we have 34 members. Namasté Solar is just one member. And we aggregate our buying power. We’ve chosen certain vendors and Amicus negotiates discounts on behalf of its members from these vendors and then it also distributes dividends to the members when Amicus is profitable in a given year. So there’s a two-fold benefit. One is in the form of lower pricing and the other is in the form of dividends. But then the other aspect of the cooperative that’s become so valuable over time has been, twice a year all the members get together and share ideas for best practices in sales or operations or marketing ideas or what have you, financing ideas. And I’ve heard members say they joined just for that. Because the value of having a peer group that you can bat ideas around with or collaborate with is really valuable. We’re all small to mid-sized businesses and there is quite a spectrum but people are very collaborative and very willing to share and we’ve seen a lot of projects be co-developed by these groups. You know we’re all over the country but there is some overlap and there is an understanding that we may at times end up competing against each other but generally speaking, whenever that happens it’s done in a more collaborative spirit than competitive one.
DB: Okay. That’s pretty exciting.
AB: It is exciting. We weren’t sure how it would go but I think it’s doing well and really the value of that collaboration has been awesome.
DB: Could you talk to us a little bit about the political climate for solar in Colorado, what the future looks like?
AB: Sure. We don’t call it the solar coaster for nothing. Colorado was the first state to pass a renewable energy standard by virtue of a popular vote. That happened in 2004 and then Xcel, the large investor owned utility there and the stakeholders spent 15 or 16 months writing the rules for the program and it launched in 2006. And at that time we had a very supportive governor and very supportive state house and senate. So we were able to do a lot on the policy side from 2006 to 2010. Nowadays our governor is still pretty supportive, not quite the champion that the prior governor was. He is supportive but he hasn’t made it one of the legs of his platform. Not as much as the prior governor. And the legislature has been a little less enthusiastic over the last few years. And largely that’s been okay because the cost of solar has come down along with the incentive programs in a way that has still enabled us to provide good value to our customers and we haven’t always had to go seek policy solutions. You know there are challenges. You mentioned earlier that there was a lawsuit that just go resolved in the 10th Court of Appeals. There are always challenges. In the PUC (Public Utility Commission) right now we have this net metering challenge, which is pretty concerning. It’s part of the broader net metering challenges we’re seeing all over the country and I feel like sometimes that swings our way and sometimes it doesn’t.
DB: Yeah, what is the challenge that you mentioned. You said there was something on the docket.
AB: The primary utility that’s subject to the renewable portfolio standard, Xcel Energy, has to file bi-annual compliance plans with the PUC and in their 2014 compliance plan it indicated that Xcel wanted to assess a fee to solar customers who are net metered. And the Public Utility Commission pulled it out of the compliance plan and said we would like to treat that as a separate docket and study the issue a little bit further before we make a ruling on it. So they pulled it out and set it over on a shelf. And they’ve been studying the issue. I think they did commission a study or report at one point as to what is the value of solar. The industry didn’t feel that it was a very unbiased report as Xcel provided most of the information that went into it. Xcel is also the administrator of the solar programs so we think that they have kind of a conflict of interest in some of these matters. Xcel has not yet decoupled it’s profit from it’s kilowatt hour sales so there’s also that conflict of interest. And then Xcel has at various points proposed getting into the solar game. So kind of a conflict of interest. So we have to watchdog that pretty closely. I think that’s the single biggest policy threat we’re facing right now, but the governor has been very receptive to our industry association suggestions and he’s working with us right now on a few policy initiatives for the next session.
DB: Did their request specify what the fee would be? How much it would be?
AB: I don’t believe it did, and if it did I don’t remember.
DB: It was open ended to whatever they wanted to make it? (laughs)
AB: Probably.
DB: Here’s an update. Just a few weeks after I interviewed Amanda, Colorado’s Public Utility Commission voted 3 to 0 to keep the net metering program as is. So Colorado solar system owners still get full retail value for the electricity that they generate.
DB: Well tell me how did you get interested in renewable energy? Was it something that happened when you were a kid? Some traumatic experience with electricity?
AB: No, no. It was more positive than that. My first job out of college was working for a non-profit organization and I was hired to work on a grant to combat the proliferation of diesel generators, which happened after Y2K.
DB: In North America or just throughout the world?
AB: Well I lived in Texas at the time and the concern was just looking at the major metropolitan cities in Texas where air quality is a real concern. And they were right on the border of not meeting the Clean Air Act standards, which is a big deal because you lose a lot of federal funding if you don’t stay below certain thresholds. And the concern was that these diesel generators, which are 2-cycle engines, not very well regulated. If people started to use those as demand shaving or peak shaving mechanisms in the summer time in particular that it would really compromise air quality. And so that was my introduction to the term distributed generation and to the concerns about polluting forms of small generation. But then we launched a campaign that we called the Solar Austin campaign to promote clean forms of distributed generation. And I just fell in love with it. I think there’s something intuitively magical about turning light into electricity.
DB: It is pretty cool.
AB: And I think it’s the most democratic (little d) form of energy because you can place it almost anywhere. Wind is great. Being in Texas, wind was super great. But wind is also a large-scale technology that you can’t make accessible to most people so I fell in love with it and it got into my blood. So as I like to say I may have studied liberal arts in college but I got in touch with my inner engineer afterward.
DB: Well thanks for spending some time with me Amanda. I really appreciate it.
AB: My pleasure thanks for having me.
You can find out more about Namasté Solar at www.namastesolar.com.