Zee Spencer

Transitioning a Small, Bootstrapped Tech Company to Self-Governance: An Experience Report

Over the past year I've been working to transition a 9-person, single-owner company to a democratic organization with a non-trivial amount of worker-ownership. It was a long, hard piece of work; and (like any democracy) that work is never done.

I am sharing it in the hope that others may consider how to transition their workplaces to ones where responsibility and authority are broadly distributed.

If you have questions, please reach out via email to [email protected]


There were a number of pre-conditions that made this transition possible: 1. The sole-founder and CEO has been deeply invested in humane and non-hierarchical organizational systems, such as TEAL, sociocracy, holocracy, etc from the beginning. 2. There were many small structures in place to facilitate group cohesion and decision making. 3. The CEO was willing to see and understand how his power within the organization and distaste for boundaries intersected with the tyranny of structurelessness to disempower the team and learn from his team how to better hold space for them to be the best versions of themselves. 4. The team was willing to put in the work to develop their professional skills in such a way that they could safely steward the organization.

We started by taking the product and engineering leadership responsibilities off of the CEO. The CEO nominated each lead, and the full team performed a confirmation vote.

Over the next few months, we iterated on formalizing the responsibilities and rights those roles had within the organization. We observed the tensions between the leads and the team. We made changes. We undid things.

By taking implicit authority away from the CEO and explicitly distributing it, the team was able to safely hold responsibility for the product that granted them their livelihood.

As we navigated these tensions, we worked to further shift responsibility and authority from the CEO into the team:

  1. We established a cross-team Finance Circle to hold responsibility for financial forecasting, budgeting, and compensation.
  2. The Customer Team nominated and confirmed a Customer Lead to hold responsibility for stewarding the norms and structures around customer acquisition, success, and happiness.

When COVID hit, it had a direct impact on the organizations financials. The finance circle was able to find ways to cut spending without recommending laying a single person off.

As the team navigated COVID, they nominated and confirmed an Operations Lead to hold responsibility for stewarding the teams working agreements, navigating the changing legal and financial landscape, and facilitating conversations around hard decisions in the event our forecasts were too optimistic.

Unfortunately, the uncertainty of Americas COVID response made it unclear whether the organization would be able to afford to retain the current team through 2021.

As the CEO stepped back from the day-to-day imperatives of operating a business he realized that his three key objectives for starting the organization were achieved:

  1. To fill a high-value, low-profit deeply meaningful socioeconomic niche in a compassionate and just way.
  2. To assemble a team of thoughtful, compassionate people who care deeply for each other and their customers and work well together.
  3. And to establish an asset that could provide him and his family a long-term income stream.

At the same time, he recognized the amount of energy he spent holding responsibility for the organization was pulling him away from his family.

The organizational work we had done gave him confidence the organization was in a position to safely steward itself. We began exploring what it would take for him to feel safe to step down from his role as CEO and seek a full-time position as a staff engineer.

Over the next three months:

  1. The engineering lead engaged in a high-intensity process of pulling as much technical context from the CEOs head as possible.
  2. The CEO nominated (and the team confirmed) an Executive Director who would act as an officer of the company and hold responsibility for cultivating a safe and effective space to work towards the organizations mission.
  3. The team nominated and the CEO confirmed a Treasurer to act as a signing authority for financial purposes.
  4. The CEO and team drafted and approved a statement of intent to formally create a Board of Directors balanced between the Founder, the Executive Director, and a Team Representative. This boards role is to provide quarterly reflections and guidance to the team and oversight for the officers.

The CEOs last day was Tuesday. The board meets, for the first time, in October.

The work of finding mutually beneficial arrangements that value and respect each participant is never done.

But self-determination? That is priceless.

Onward.


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