August 22, 2016
Bill Flagg

What is Sovereignty?

My partner started RegOnline in 2000, I joined him in 2003 when the company was about $1 million in revenue, profitable, and growing about 100 percent over the previous year. Each year we increased our absolute growth and profit margin. Each year we took care of employees and customers better than the previous year. Each year more and more employees and customers suggested that RegOnline was the best place they’ve ever worked and the best company they’d ever done business with. We took the whole company to Mexico every year, we brought in a chef to make everyone breakfast, we let customers choose not to pay invoices if they were not completely satisfied. But, more than ALL of that, we created a place where employees and customers felt like family to each other. It was successful and it gave me the opportunity to realize the beauty of building a culture-focused company that had a positive impact on its employees and customers.

When we sold RegOnline nine years ago, I had no idea what I was about to do to our company. Of the dozen people I reached out to get advice on whether to sell or not, not a single one shared the reality of what the sale would mean for the future of the company, to our employees, our customers, our vendors, and the unique life-enhancing impact we were having in these communities. They only focused on the logistics and value of “The Exit”.

Over the past nine years, I’ve watched as the thriving company of 70 people I built has atrophied into a non-existent company with the technology folded into a subsidiary of a private equity group that flips its companies every three to five years. It made me wonder, how did the World of business get turned into an industrial meat farming operation? Pump them up, sell them off, and not worry about the sorry mess that comes of the organization in the process.

This is not the world of business that I believe in. My experience has taken me down a path, where I’m passionate about sovereignty. When I came across the word “sovereignty” about five years ago, it encapsulated so much of what I love about independently owned companies and all the wonderful things they bring to the World. As I’ve seen and experienced first-hand the differences between companies that have institutional investors and owners and get flipped over and over again versus companies that grow via their own profitability, I’ve grown to love the benefits that these sovereign companies more commonly enjoy.

First and foremost, the stability that comes with being profitable and not only independent of the whims of outside capital, but also the abundance that employees feel from companies that can continually give more benefits every year. There’s the freedom, trust, and respect that employees and customers feel when refunding a customer tens of thousands of dollars when the customer didn’t get what they paid for because it was the right thing to do. And there are quirky benefits like sending customers a Company Holiday Cookbook of everyone’s favorite recipes (with pictures of them with their dishes) instead of a Holiday card. And when customers receive a random email on a Tuesday that just says “It’s Tuesday and we just wanted you to know that we love you, we really do.” Or, when the employees decide that instead of having a company party, it’s going to give the money to support local flood victims.

Now, many of these things can and do happen with funded companies. But, there’s something natural missing in the soul of it all when those leaders know that ultimately the destiny of the company is owned by investors who have a vastly different intention for the future of the company (i.e. don’t get too chummy with Bessie the cow, because she’ll be on your plate one day).

Sovereignty is a state that fosters freedom. Freedom is the absence of necessity, coercion, or constraint in choice or action. So many companies in the World enjoy freedom by being Sovereign.

I’ve coached hundreds of entrepreneurs for almost ten years now about the beautiful freedoms that come with keeping their companies sovereign. Whether it be a startup that wondered if they should raise money to get off the ground or companies that are $1 million, $5 million, or $50 million in revenue that are thinking of bringing on investors or even selling their company. Many can’t resist the allure of fundraising and the buzz and relief of exiting. I don’t blame them, there’s a massive institutional current to churn investment and companies and incredibly smart and persuasive folks whose jobs it is to get you to part with your equity, companies, and ultimately sovereignty.

For those unique souls who take the other path--the path to stay sovereign--they find an unmatched world of freedom and prosperity. It’s like an alternate universe that few business people in the World know its incredible existence, except for those that unintentionally stumbled  into it and have found themselves in these benevolent sovereign kingdoms known as their companies.

Some shining examples of sovereign companies are 37 Signals, MailChimp, Patagonia, Tough Mudder, Berkshire Hathaway and more. And on the public side, companies that are sovereign in that their founders control the companies are Nike, Microsoft, Apple. 

At Sovereignty, our purpose is to open this path to more companies by creating community, sharing resources, and providing answers that help leaders and their businesses navigate and thrive. We want “We are a Sovereign Company” to be a badge of honor that leaders around the world wear.

By helping to fuel a World of sovereign companies, we believe that more employees, customers, and communities will benefit from these independent companies because of their long-term focus on business rather than financial engineering. Great communities within each company are built and nurtured that make them amazing places to work and as a result provide greater value and care to customers. With happier customers come happier employees, and the circle of care expands as the company grows. It’s hard for Conscious Capitalism to continue to thrive in companies that don’t control their own destinies. Eventually, it peters out via the churning of investment and acquisitions where culture means almost nothing compared to three to five-year maximization of ROI. By staying sovereign, companies can nurture this cycle indefinitely.

By joining together to be “Sovereign”, we can build strength and confidence in others who have the drive to make the leap into building and keeping their companies sovereign and to enjoy the fruits of freedom and independence on a long-term basis. We can compare notes in a way that will continually add more value to the lives of our employees, customers, and communities. If you are or aspire to be sovereign, join us and open up the opportunity to the growth, fun, and freedom that we all need to thrive.

What is Sovereignty?
Published on
August 22, 2016
Bill Flagg

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