EP22 - Astrophysics & ESOPs: A Natural Fit

In this episode Jason flies a little too close to the sun when discussing the impact of a company’s structure on its ability to harness the power of employee engagement. The discussion covered how employee engagement impacts business success, with comparisons to different types of civilizations and their energy usage, including the idea of harnessing this energy effectively. Overall, this is episode provides recommendations for improving employee engagement levels within companies, emphasizing the importance of collective effort and the role of successful businesses in supporting local economies. 

Transcript

[0:15] Welcome to the journey to an ESOP and Beyond podcast where we seek to make all things ESOP vote accessible and understandable I'm Jason Miller your host for this episode where we're going to discuss the power of Employee Engagement. I'm going to attempt to do that through a parallel with everyone's favorite subjectastrophysics. And more specifically in the Cartesian scale.

[0:42] Now I know what you're thinking and it's either 1 of 2 things either Jason you're such a nerd thank you yes uh or 2 you just said, that you make all things ESOP accessible and understandable and now you're adding astrophysics. Bear with me this is either going to be great or a fantastic failure so come along for the ridewe didn't get to the moon without losing a few Rockets along the way and we're trying to do great things here uh so thank you for both your patience and your attention.

[1:24] So I live on the space coast uh and I say that pretty often because no 1 know exactly where my city is or when I say where I live they do know where the city is and then they refer back to the fact that NASA is just a Stones throw awayand we have the privilege uh of being able to see rockets fly above the tree line uh whenever they are launched now from Cape Canaveral and I think my kids may take it a little bit for granted where when I was growing up in landlocked Virginia uh the things about space were always a huge deal um when we think about the shuttle program and then our exploration uh about that and it's kind of into the unknown, right and thinking about the space of space and what's transpired over the course of my lifetime is very very excitinguh stretch the imagination of a young kid and I think today.

[2:24] Uh space still does that uh for for most childrenand, as we look out into space uh you know how have you ever looked up into that that night sky and kind of wondered about who else is out there I I think, most of us probably have had that conversation uh whether in in seriousness or in joking or in passing with other people when we look out to the stars who who else is out there uh and and who are they and how how do we think about the possibility of those existing so how in the world did that and influence you Jason to talk about Employee Engagement uh and aliens and and civilizations and we're we're not going to get into alien conspiracy theories today and so let let me help tie these 2 things together with the frameworkthen we're going to start talking about the the kardashev scale that I mentioned before and we will weave this together through our our time together uh as as you're listening. So I want you to think aboutstructures.

[3:44] And we're going to talk a lot about structures and you're going to hear me mention those and then the second thing that I want you to think about is energy. And the energy that we're talking about specifically today is Employee Engagement.

[4:01] In relation to the structures and then last we're going to talk about the outputso structures first. Energy of Employee Engagement is kind of the subject around this secondand then the power of the outputin the end.

[4:23] So Astronomers have a tool that's called the kardashev scale and that measures how advanced a civilization is based on the energy that it can harness, so Nikolai kardashev was a Russian astrophysicist in the 1960s that asked really how much energy can a civilization really use.

[4:53] And in asking that question created this scale he imagined 3 different levels of that. And the first 1 isa type 1 civilizations is it listed out by types type 1 type 2 type 3and the type 1 civilization is the planetary civilization. And that would be kind of like the Earth right because we live on a planet and the question related to how much energy can a civilization use uh is can the type 1 civilization uh use all of the energy of its own planet solar wind geothermal fossil fuels every drop and Every Spark. Consider the planetarycivilization or the type 1. Not just a planet but as a corporate structure and so if we say that the planet is your traditional corporate structure your LLC your s Corps your partnership uh whatever the the legal structure of the of the business is because we're relating this back again to employee engagement and business. The planetary civilization is this basiccorporate structure.

[6:23] And to get the most out of employees we all inherently know that engaged employees. Are better for the businessthen disengaged employees and we can look at it. Somewhat binary on engaged versus disengaged but I think we all know that it's somewhat of a spectrum of, disengagement to engagement and at that varies from Individual employee every day depending on the circumstances around their life are you more engaged when you show up today or are you less engaged when you show up today because of whatever may be going on around you that's outside of work, how does the company benefit from you. From an employee uh based on on their engagement and really the the the greater tuned in that they are to, what the business requires then the greater the output for the success of the business.

[7:31] And the reason that I'm using these 2 kind of nebulous ideas uh using that word purposefully right what what is Employee Engagement uh and then what is this concept of of these planetary civilizations and and this partnership scale that you're talking about Jason, and I I think most owners would agree that if they could much like a child's energy take Employee Engagement and distill it down into a uh a beverage and bottle it and put it in the break room for everyone to take some take from in the morning so that they become more engaged they would do that. And that's 1 of the thoughts that I had when I was thinking about engagement as an energy which naturally led to uh how how do you harness that and how then do the imposition of business structures of corporate structures of leadership of your processes of the, the framework of your business is it set up. To properly harness the energy of the engagement of your your employee. And soyour traditional ownership structure.

[8:50] Is self-contained on on the planet and this planetary civilizationand just so that you know that you're in great companyuh the level of. Uh the scale this uh in this type 1 civilization that the Earth today on the kardashev scale is around a 7. So reaching 1 on the the the kardashev scale would mean that we have managed to utilize all the energy of of the planet and extract in the the greatest efficiency every drop and Every Spark of that but we're not there yet. I would imagine that many of you listening would say in relation to harnessing the energy of of your employee engagement that you're not quite to a 1 in being able to extract, all of that from them and I I use extract um just as as a a visual term, and not so much as uh ah ah ah means of uh kind of pressing blood from a turnip right, so to be clear on on my context and use of words as much as I can as as we go through this. So 1 thing that you can do as I mentioned this.

[10:14] Energy-wise as a planetary civilization we're at 7 and and we have some room to grow before we can say that that we've tapped into everything that's available, uh in so you can say where where would I be where would my business be if I were to put. My use of Employee Engagement on a scale from zero to 1.

[10:42] Sit with that for a minute.

[10:56] And there's there's a lot that you can do around uh refining what that number would be and and soliciting feedback and and C uh Employee Engagement surveys are very useful tools uh they are a tool that that you you can you can utilize if you have it before I'm sure there there are some resources for for you to tap into to do thatbut, your gut reaction to where do you sit on zero to 1 1 being our company our organization our culture. Is at the max that it can be under our current leadership, under my leadership under our leadership under our ownership.

[11:42] That's the framework that corporate structure that ownership structure that I mentioned firstand in the podcast. And your processes uh. Compensation uh your culture cultivationthe things that you do for your people, and around your peopleto create an environment that allows them to be their best self and most engaged are the activities that you can view on this planetary, civilizations scale.

[12:27] At the end of the daythe planet is self-contained and there is only so much energy that can be extracted from, that framework from that structure from your business from your employeesin that arrangement.

[12:47] Jason you're setting us up for something so what what's nextso let's go back to the kardashev scale in and of itself, what's the type 2 civilization if planetary civilizations are zero to 1 then there's got to be something beyond that right and then we look at 1 to 2, and a type 2 civilization is a stellar civilization. They have been able to create and harness the full output. Of their starnow we're outside of the planet we're in the solar system and I want you to think about the Sun.

[13:32] The magnitude of energy that can be extracted from the Earth from the planet isso much less than what could be efficiently harnessed from the Sun.

[13:48] You're like this this seems like a foreign concept that seems like a huge leapwhen we see how many Earths can fit inside the Sun and really that it produces the the energy for all life in an entire solar system and all the things that that are created in in the environment uh Beyond uh our our eighth planet Pluto the dwarf planet the other night planet that might be out there into the orc cloud and then all those other nerdy space things that I love um the the center of that is is our sun, and believing that we could. Find a way to harness and extract the full output not of the planet right solar wind geothermal fossil fuels all of that now it's the Sun.

[14:40] Is just a huge hugelywell people have thought about this for a long time um ever since this this came out uh and and we've started thinking about space and aliens and advanced civilizations and how could they go spend all of the energy to move through the the solar system or through the Galaxy or between galaxiesand we've created all kinds of of theories around that so 1 1 thing that you may have heard of is called a Dyson Sphere and this isn't your vacuum cleaner uh that that kind of rolls around and sucks up dust um but a Dyson Sphere is a mega structure.

[15:25] That is conceptualized that surrounds a star to collect all of its light.

[15:33] That's a leap Beyond planetary energy and tapping into an entirely new scale of powerso we're back to structures. Andin tying this back to Employee Engagement. On the planetary scale to you as an ownerit's you as a leadership team. Under that that traditional structure of whatever partnership uh escort. And now we're talking about a much bigger structure that doesn't mean a larger Corporation. When we compare what we're trying to accomplish and harnessing energy of a a greatersource. This is where um I'm going to challenge you with the structure that we're moving to for for this Dyson Sphere is really looking at ways to incent people outside of the current ownership.

[16:36] With ownership like Stakes. So the transition from just you as an individual to if we don't want to move to something that's completely new we don't want to sell our company to an outside party we're not not ready for whatever how how can we at least move up on the kardashev scale. To a a greater harnessing and energy for employee engagement.

[17:04] And there's no better way to do that than thinking about instituting something like synthetic equity. By Jason I know that we've we've heard about synthetic Equity before in light of uh ESOP transactions stock appreciation rights and warrants for owners and compensation for for their seller notes and um we're we're pretty comfortable with the idea of of What synthetic Equity is in in light of a a specific ESOP, transaction. On the other side of that coin is most owners do not want to give up actual Equity to individuals. Before they are ready to make a a full transition or commit to a significant transition. So we're going to get to the type 3 civilization in a moment and I think you can probably see where I'm going to be going with that but we're talking about harnessing the power on of an energy source of Employee Engagement on a whole new scale, and that gets to how do you as as an owner so we're still humans in this this Dyson Sphere uh kind of concept right so we're just moving from planet to Sun how do you as an owner, maintained still. Your ownership but giveand tap into the benefit of more people under you that have key roles.

[18:30] That have an outsized responsibility on the performance of your businessand therefore the output from your business.

[18:43] And 1 of the best ways to transition into that is thinking about the synthetic Equity as an additional incentivebecause now you have more power. You have more people. That are looking into the future of your business saying how can we now instead of how can Ihow can we. Do better how can how can we grow how can we tackle the worldand that power of we. Is magnitudes greater than the power of you.

[19:23] In the same measure that a stellar civilization that's able to harness the energy directly from the Sun is from you in a planetary civilization extracting that, from the resources on the planet. So Jasongreat we've talked about the planet we've talked about the Sun what what else is capable Imagining the the the hugeness of a structure harnessing energy that's surrounding the Sun, there's uh a another Mega structure uh that says now howhow. If we're if we're able to do that is there anything else that that we can conceptualize that's out there and um I think it's called scat off Thruster and I'm gonna have to to go back and look at my notes around that but there is a another conceptual Mega structure uh at this Stellar civilization level that harness is not just the energy of the starbut uses it as a propulsion system for an entire solar system.

[20:41] Jason I'm not tying this together and I'm sure that that many of you are um but if if you're struggling with that idea so we we have the mega structure around the Sun we're talking about that by the use of things like long-term incentive plans of synthetic Equity uh for your key peoplethat, are are waiting its potential energy to to propel your company forward with with their their additional contributions because of their outsized responsibilityand this this Thruster mechanism now creates momentum that pulls the entire solar system. In in an intentional Direction wherever that that Civilization that Stellar civilization wants to go. So we have the second framework um it's not just stationary. And I would offer that if you get more people that are vested in the outcome. Of your day-to-day work and results.

[21:59] With that power isn't just planetary and isn't just a solar it's the entire system around you I'm not taking a side here and talk about the communities that your companies are in. And we think about economics we talk about economicsyou yourcompanyin your town.

[22:24] Employees individualsthat feed their families and uh you know they, they buy homes they have a life outside of workand that life outside of work we're in a a consumer economy and it creates other opportunities for other businessessome of you are are in communities that are smaller than others uh that are more rural than Urban and if you're listening to this podcast I think it's probably really important. To you that you maintainfor that Community what your success has always brought to it.

[23:10] And that's 1 of the powers of Employee Engagement and getting. People and leaders in your company a stake in the outcome. While you still have the ability to direct and control where you're you're moving that Civilization to what you're doing for your community and I applaud you for your success and your commitment to community. So now I'm back toour Carter ship scale so type 1 planetary civilization type 2, Stellar civilization type 3Galactic Civilization.

[23:59] Just like the leap from planet to Sun may have stretched your mind a little bit. Now think about harnessing the energy of an entire galaxyliterally billions of stars.

[24:18] It's mind-bendingfrom a planetary perspective it sounds like science fiction. The key is it it's not an incremental step it's an exponential leap.

[24:35] And just like today with your current structure you may not be able to imagine what it would be like if you could harness that Employee Engagement energy. To get everyone rowing in the same direction and it's probably a lot like when you first came here going I want to learn about these ESOP things and people tell me that they are great for culture and they tell me that uh it's a great exit option for for me and we would be a really good fit for that but I just can't imagine it. I just don't have any any concept of what that could look like or what it means and 1 of those again any nebulous. Ideas you can't get your arms around entirely we can't condense it into a bottle to to put in your fridge for everyone to drink from every day is what happens inside of an ESOP company when everyone is engaged.

[25:38] What would my company look likeif every person had a stake in the outcome.

[25:48] And that's this lead to a Galactic Civilization so it's not just leadership it is every employee. So I think you can see the tie through from the beginning. And what can we do how how policies can we put together what what kind of events can can we do what what meaningful things can we support internally on our planetary civilization under my leadershipto. What's widening the tent the people that I trust to people that are great at what they do and let's start tapping into to that energy and then a natural leap from that. Iswhat if we could get everyone.

[26:36] What if we could harness the energy from everyone what if we could increase engagement for everyone. I don't even know what a mega structure could look like. For harnessing the energy of an entire galaxy but I do know what a corporate structure looks like it's a harness the energy of an entire company. That's an ESOP.

[27:04] The kardashev scale isn't about doing more of the same it's about reimagining what's possible, when you harness a new orderof energy.

[27:23] I want you to think about that for a moment.

[27:32] And what does it mean for you.

[27:39] So I'm going to give you a couple of things to walk away with todayand some actions that that you can do.

[27:47] Figure out where you are on this scale are you a 0 2 are you a 1 are you a 1.7 are are you are you a 3.

[28:00] If you're a type 1my recommendation is for you to focus on optimizing what you already have. If you don't already have it these are some things that that you can considerstrong benefitsrecognition. Creating expanding improving culture.

[28:24] There are things that you can do every daythat harness more energy for your own success.

[28:36] If you're approaching type 2.

[28:41] On this scaleand you're going man what can I doto to get more people. Involved and to use their energy because I II'm getting tired or, it's large enough that I I can't pull it along or push it along fast enough without some help from from some key people that I really trustExplorer incentive equity. This is your Dyson Sphere moment.

[29:11] Think about what that would take and what that would look like and reach out uh and and explore itso that you can harness that energy to move your company and your ownership and your people 1 1 step further. But if you're ready for type 3and you may be because you're here on an ESOP podcastman lean into esops. And that's how you unlock Galaxy scale engagement.

[29:47] 1 other way to think about this type 1 companies burn fueltype 2 capture sunlight. And type 3 like the Galaxy with their people.

[30:02] The energy that Employee Engagement energy your employees creativity their commitment and ownershipit's already therethe real question for you is are you still mining coal or are you ready to light up the Galaxy.

[30:19] Thank you, so much for listening in today and for my experiment uh with tying in Employee Engagement and esops and astrophysics I would love to hear from you on whether or not this was great or if it was a fantastic failure. I'm really glad that you're herelike subscribe share this episode with a friend.

[30:50] And we'll see you next time on the journey to an ESOP and Beyondpodcast thank you.