 I'm going to bring three thought leaders to the stage. And while you all are getting situated, I know folks are moving around in the back. I want you to consider what it means to have money and meaning touch your life in a way in which you have the opportunity to touch other people's lives and what banking has looked like, who banking is for, what that conversation has felt like over the years here in coordinating and producing SoCAP, but in your own personal lives and where you live, in the places that you live. So we have Kat Taylor, who is the co-founder and CEO of Beneficial State Bank who is joining us. You all can clap it up for Kat. When I asked her what makes her come alive and what she's thinking about right now, she just gave me a little bit of a snippet around her thoughts around if we don't deal with and address head on the issues of direct investment in our community, there aren't any systems around philanthropy that can fix that. And so as an innovator in the Bay Area and across the country and throughout the world, her work is at the intersection of culture and social justice and money. And so we welcome you to the stage again this year, Kat. Also Andrea Armini, who is the Executive Director of Transform Finance. Andrea is someone who I met some years ago at the beginning of the conversation and the design of Impact Hub Oakland, his deep thoughtfulness around hope and what it means to dig deeply into the conversation of equity has really shaped my understanding of how the transforming conversation of how we pull the thread on finance and who that conversation is for is deeply important. So please welcome Andrea Armini to the stage as well. Y'all can make some clapping, some hooting, some hollering, all of those things. And then Robin Vargesi, who is the Head of Partner Engagement Lead Investor and Lead Strategist at Open Society Foundation as well. He lives in Brooklyn, so y'all you always have to just represent when you're on the left coast when the Brooklyn people show up for us. I asked him what was giving him hope backstage and he said, you know, I'm really inspired by mass mobilization of people coming to do experiments and getting to their own thing and just bringing the fire to us. And so please welcome Robin to the stage as well. Thank you, Ashara. Thanks everyone for joining us for this quick afternoon chat. We wanna keep it informal because the topic is fairly heavy. The way that we've been looking at this and some of you have heard all of us probably in different ways framing the issue as one of looking at the plumbing and the structural issues around finance that are problematic. So it's not just a matter of the what gets invested in but the how, who gets to make those decisions, who gets to take the residual value that companies create. And more fundamentally really thinking who owns what and what does it mean to own something. This is a somewhat uncomfortable conversation perhaps, right? We are by and large in a position of ownership but if we're really serious about the transformative aspect of the work and reshaping who wins and gets and who loses in society through capital and through economic activity, then we need to take a bit of a harder look at ownership. And ownership traditionally is a set of rights that you have over the value that is being created but also over the decision making that affects us. And generally as you know, it's something that goes on in perpetuity if you are an equity investor or if you own a piece of land. Now, we don't really stop and question that by and large. We think, yeah, it's almost a God-given right. And if we think back to the work of Marjorie Kelly in her book, The Divine Right of Capital, it very much started raising that question for all of us. Why is it that it's the investors, that is the owners as it were of a company, the ones that get to make decisions that affect a lot of other groups of stakeholders? Why them? It's in case law in the United States but it's not a law of nature by any stretch. So we have been questioning that and saying if it's the type of paradigm that eventually really needs to change, that is not sufficiently justified. And if it were to be justified, then we would be okay with that, right? If somebody were to say, well, here is why this makes sense. Decisions that are affecting all of us will be made by a small group of us. And as Marjorie was looking at it, she said, well, it is very akin to aristocracy, right? And to the way in which decisions were made in medieval and post-medieval England where a certain number of people would get to vote just because they were the ones that owned the land. And it wasn't questioned until it was. So I start from the standpoint that it is possible to change this and change is coming. The moment is now to have this conversation. Many of you heard Anand this morning, you heard Jed Emerson with the rising wave of populism. This is increasing. And I want to think of it specifically from one angle that is the increased role of the corporation in our life, right? We're no longer talking about something that is fundamentally private. And you say, OK, the ones that started it or put the capital in get to make the decisions. This is something that will affect all of us more broadly, right? If Apple has a trillion-dollar market cap, right? They're way bigger than a lot of countries in the world. And why is it just the owners of the capital, the ones that have invested as shareholders in Apple, get to make those decisions? So we want to explore a little bit the why of the need to reconcile ownership, but also some of the models that have come up, because this is not an abstract question, right? There are ways in which we can start thinking differently about governance, thinking differently about who gets the value, and thinking differently in my particular obsession about the perpetuity of a capital investment, right? That you invest capital at the beginning, and by and large, you keep on reaping the benefits of that in perpetuity, regardless of your not having put any more effort beyond the initial effort or that initial risk. By alternative ownership, what do we mean? All of you are probably familiar with employee ownership, right, as an alternative to just capital, even though that is a shifting of who owns the shares, right? So you're turning the employees into owners of shares, so it's still a similar form of ownership. You've heard of platform co-ops, probably, where the users of a particular platform, like it could be Uber, it could be Twitter, would be the ones that get to make the decisions on it, and get the residual value from that. So looking at some of the models that break down and reconceive, who gets to make the decisions? Who gets the value for how long and why? So that's what we'll explore over the next 20 or so minutes. I'll tell you, I can want to sort of explain how we got to this issue. So the Open Society Foundation is not a development agency. We are not in the business of poverty relief or poverty alleviation. We're not in the business of strict economic development. So it's interesting that we wind up with a program which does work on all of those things. So how do we get here? At some point, we came to the realization, the practical realization, not just the intellectual one, that economic power, like political power, can oppress or liberate. And basically, that the arc of economic power could be bent to social justice or needed to be bent to social justice, especially in context where it's going the other way. So we're a global foundation. We work in over 140 countries and many of those countries in the pursuit of open society, meaning tolerant, pluralistic, open democratic ones. And a lot of the indicators are going the other way. What is the role of development in all of this? And so the role of development in all of this was that basically the institutions, the economic institutions and structures of a society were fostering a kind of politics which were anti-democratic. So how did this lead to the question of ownership itself? And this is where we started to think about, what did the institutions of a just society look like? And here we too started focusing on the intellectual question of what is ownership. And ownership is basically effective power over something, over an asset. It's the ability to use it however you want. It's the ability to claim its value add and its ability to transfer it whichever way you like, regardless of impacts on others. And so concentrations of power and of income and wealth are very good proxies for concentrations of power. And that's at the heart of all of this is a deeply political question, which is if economic power is an input into political power ultimately and social power, how do we address its maldistributions without addressing the maldistributions of economic power? And that led us to this question of ownership. Not simply its distribution, but how it's structured in all its dimensions across multiple parties. And so that's how we wound up with our body of work in this space, which is nascent. But we work in, but we've started to work in a number of issue areas around employee ownership and community ownership, around what should be the structure of these digital platforms, especially in the Global South, or organizing labor markets, especially informal labor markets in very intense and complicated ways. And it's a recent journey for the foundation, but it's kind of an exciting one, which has galvanized much of the foundation's work on democracy. I guess I would say how can we not look at structural change at this point? So we're hurtling towards climate disaster. We have, in those areas where racial caste systems are still determining economic outcomes to the detriment of many, many people, we have a counterbalance on the other side of people who might be coming into the middle class, but have no political self-determination. We have rampant poverty. And poverty, to my way of thinking, is not God-given and not self-generated. It is societally imposed. And it's super expensive. Desperation is bad for all of us. We are threatening social chaos and control states and fascism, not only in many countries of the world, but some of the most powerful. And if you ask me if this economy has been successful, of course, I have to listen, particularly to the financiers who point to how much wealth has been created. But it's been created for very few and taken away from the many. So a dollar invested in 1980 in the stock market is worth $20 now, but a dollar of wages in 1980 is still about a dollar today. One third of workers in the United States work full time and still meet the federal definition of poverty. It should be about one in two by 2020. And half of California's children are growing up in poverty now in the richest state in the world. So that isn't acceptable to any of us. And I think we have to look to the fundamental institutions of society who are responsible for creating those outcomes. And that begins in our case with banking and finance and moves quickly into business and the economy. Capitalism is an agnostic system. The rules are not created by the laws of physics. They're created by human beings. And if we allow concentrations of power, they tend to create the rules of capitalism in favor of further concentration of power. We have adverse natural selection in our corporate leadership. Essentially, whoever's willing to do the absolute worst things to the planet and people gets elevated. And the shareholders benefit from it without actually accepting responsibility for it. So enough of the Debbie Downer stuff. I actually am an optimist and I feel optimistic because I think this kind of darkness is always what happens before the dawn. And that we have the ability to recreate society and business and the economy with structures that are much more favorable to egalitarianism, to self-determination, and to plenty for all and the best place to work and live for all as well. So by day, I'm the CEO of a bank. I'm very lucky in the company that I keep. There were about $1 billion in assets, 250 employees in 17 branch offices. It's called Beneficial State Bank. That was chosen to indicate that we can all be in a beneficial state of mind and body. It's a triple bottom line bank model, serving social justice and environmental well-being at the same time that we're economically sustainable, if not competitive in bank markets. We don't get a break. We still have to compete well and earn a profit. There are three design features of the bank that put it in that new construct of ownership. First and foremost is an ownership model that is a legion to multiple stakeholders. We don't believe that the business of corporations is to maximize profit for the equity shareholder. We absolutely reject that. Absolutely reject that. Our stakeholders include customers, our colleagues, the communities in which we operate, the planet, and the public at large. And we are an optimization model. We don't allow maximization for any one of those stakeholders. In order to ensure that, 100% of the economic rights of the bank are owned by a public charity foundation that's permanently covered in the public interest. This is as close as a bank as we could get to the cooperative model of a credit union, which is member-owned and driven. In this case, we know that our shareholders, our economic shareholders, will pitch us right out if we don't serve the public interest. In addition to that, the most powerful thing about banking is the lending practice. We think of banking as the original and most powerful form of crowdfunding. Not that a specific deposit funds a specific loan, but all deposits fund a lending practice. And those deposits are crowdsourced. They're about $12 trillion in the US economy. They come from everybody. And the crowd is wise. We have to surmise what they want, but we're pretty sure they want us to lend to a new economy that's fully inclusive, racially engendered, just and environmentally restorative. So we're constraining that lending practice to produce 75% of loans that increase what we really need, like affordable housing and renewable energy or borrowers who are also aligned in the public interest and cooperatively governed, and voices that have been left out of the economy to date. Because those who have experienced and survived the material and psychological consequences of extreme oppression have the best insights about how to self-organize. And in this country, having started in slavery, native genocide, less in personhood for half the people and persecution of immigrants and refugees, we have no shortage of brilliant communities who know how we should reorganize society. The last design feature is just radical transparency. We should get to know everything a corporation is doing, and we're no exception. So for instance, we pay 150% of living wage to all employees fully benefited in an industry where one third of bank tellers are on some form of public assistance. So more, I think, the lesson of the bank is that we have to strive for a new ownership model that's as close as we can come to a cooperative, both run by our customers and with input from our colleagues, that some ownership, some things in life need always to be owned by the employees and the participants. And some things should never be owned at all because they're part of the ecological commons. I know we'll talk about that later. I'm really taken by the governance. And a lot of our work is aiming towards forms like cooperatives and trusts and ESOPs, at least democratic ESOPs. But I'm also struck by what's happening in this country. In a previous life, I was a scholar of what used to be called in the 60s and 70s economic democracy. And there were movements in the United States and Western Europe to basically have greater stakeholder voice in the governance of systems. And you still see this in places like Germany, where, at least in large firms and many sectors, workers elect somewhere between a third to 50% minus 1% of supervisory boards and have representation at the operational management level through works councils and things like that. And it really has, there's a zeitgeist in which where the concept is being broken up because one thing that people are feeling that it's not working. But I think we should also think about the question of how do you get the perspectives of multiple stakeholders, many of whom can't be there in these organizations themselves. And so I don't know how many people are familiar with the Mondragon Corporation, which is a large cooperative network in northern Spain. 75,000 workers, about 18 billion euros a year in turnover. So it's not quite Global Fortune 500, organized as a network of cooperatives. But it still has large supply chains across the global south, where everyone doesn't have a voice. And so some mix of where the mission is embedded and the institution itself. So when we think about voice, there are multiple ways of representing voice. And you might need multiple forms of representing voice in order to embed it in an organization, especially embedded in corporations which are very global. It's obviously easier with smaller locally-bound ones where communities and workers can have that kind of voice. And I think in those kinds of experiments we see across many parts of the United States. And you see networks emerging in the Bronx, in Cleveland, in Chicago, in Los Angeles, and also like rural parts like Western North Carolina. We find sort of a feverish series of experiments. That's because something's gone wrong, right? Yeah, and maybe with that, I want to get concrete for a second, because we're not talking about craziness here, right? Both Kat and Robin are actively working on this. And we at Transform Finance sit in a particularly fortunate position, whereas a field builder, we have a mandate from a variety of stakeholders that have said, yeah, we want to look at the work that we do, especially on the investment side, through a different lens, right? What is the engagement of all the relevant stakeholders in the design and the governance and the ownership? How can we make sure that we're creating more value than what is being taken out by the investors? And how do we make sure that the risk is falling adequately and fairly on the various stakeholders, based on how able they are to bear that risk? So they said, OK, we all agree that there is a problem with traditional ownership. We all agree that the way that most mainstream impact investing, even is looking at it, is not even coming close to the issue of wealth inequality, of power inequality. So what is out there? So I wanted to mention quickly three models that I think are interested to look at right now. The first one that will be featured tomorrow, I think, as part of the Alternative Ownership Track is the Trust or Purpose or Steward Ownership Model. It's something that is not new, right? A lot of the new stuff is old. The Bosch Corporation in Germany did this about 100 years ago when it said, no, the corporation will not be owned just for the benefit of the shareholders in that Dodge versus Ford American common law approach. But it will be held in a trust that will vote the shares for the benefit of a variety of stakeholders. And Purpose Capital that is now pioneering this reinvention of the Steward Ownership Model is doing a series of transactions right now to convert existing companies to a Steward-owned model where multi-stakeholders that are relevant to the corporation and that can be its employees, but it can also be its supply chain. It can be the customers, the core customers, all get a vote and all get a part of the economic value that is being created by the company. So that's one of the most concrete examples that we have seen of a new approach to ownership where you're distributing the governance and you're distributing the ownership value. The second one, which is a little bit funkier even, goes to the point of the perpetuity of the capital. This idea that you go in, early-stage investor, buy a bunch of shares, and then you're still sitting on those shares and deriving value well after your initial $500,000 has done its course. A lot of people have contributed more. The workers have contributed, but once they leave the corporation, they no longer get any value. Why is it that you continue to get it? So the alternative to that is a model that we saw called self-diluting equity, where you would have a company with a fairly traditional equity ownership structure, but every six months, the company issues the equivalent of 50% of its current equity and distributes it according to who has contributed to the well-being of that company over the last six months, right? You can think of Facebook having been set up like that from the beginning, where it said, okay, here's the initial capital. Something good was done with that, but then management contributed to it, the users contributed to it, the advertisers contributed to it, and therefore they all should get an equity share, and the initial capital will still be there, but its percentage will be diluted in correspondence to the fact that they are now contributing less to the ongoing well-being of the company. And the third, which I think is very important for impact investors that think of it in terms of maximizing risk-adjusted returns to meet the market and whatnot, is this idea of the capped returns on equity, which I think is something a cat and a beneficial state bank have been looking at and saying, look, at the starting moment, right, when you start your company, it's worth zero. You own 100% of the shares and you think, what if we had a big exit? What if this thing worked really well? Do I need more than $30 million? Let's say, no, probably most people will be happy with an exit like that. So you set that number and you say, anything beyond that, we can divide into a pool, right? I would be very happy, frankly, personally, if I had a $30 million exit. Now that my company is worth zero, I'm thinking, if that day ever comes, I'm totally happy for the rest to be distributed across everybody that has contributed to this. It could be the workers, it could be the customers, right, in the way that Reddit did with one of its raises for its user, it could be anybody else, but there's no reason why all that value should accrue to me just by virtue of my continued share ownership of it. One of the things that we are doing, also in partnership with Transform Finance, is trying to look at what kind of financial structures we can facilitate the transfer of businesses from their owners to their workers and communities, right? And this has become sort of an important question with lots of policy interest and public interest, because the baby boomers are retiring and exiting from, depending on how you value it, say, 10-ish trillion, 12-ish trillion dollars worth of assets, the small, medium enterprise space. This is an opportunity that many actors, you know, are excited about, because it's basically a win-win, right? I mean, it's sort of, these people want to sell their assets, many of them will have a hard time finding buyers, helping to organize buyers who are people that they know who've been their employees, becomes a viable solution, especially when the other prospect is shutting down the firm altogether and not having it sold a viable asset, orphaned and shut down. And, you know, there's no small design challenge in this, because what's needed is a financing vehicle which has the risk profile of equity, but the control profile of debt, right? And so, and this is sort of a space which, you know, we can, where a different kind of investor or an investor who thinks differently can play. But I think we should be clear about problems which we think have, where we're always in search of win-win solutions, right? Win-win solutions are basically fundamentally technical solutions, right? And there's a limit to how far a technical solution can solve a political problem. If we think that fundamentally that the problem of the concentration of the structure of ownership is a political problem, there's only so far solutions like the ones we're pursuing, you know, admittedly, can take us. And that's something I think we shouldn't lose sight of, right? And at some point, if we think economic inequality has gotten to intolerable levels or levels which are dangerous for democracy, re-addressing that means that some people will not be on the winning side of things necessarily. I'm glad we're getting to what I think is at the root of all this, which is power. I know we talk about money and capital and equity and everything else, but I think it is power and these opportunities to redistribute power depend on us acquiring the power to do it, to begin with. That's the political nature of the problem. So to my view, capital has been beating up on labor for centuries. Capital is inanimate. It doesn't have an inherent value to society, whereas labor, that's people, and we aren't just labor. We also, we create value through our work, through our voting, through where we shop and what we shop for, through the families that we care for. So we're much more in terms of value creation than just our work implies. So I would rather favor a situation where people are rewarded for all those constructive activities than continuing to reward capital that's inanimate. And if you look at what's happening in this year alone, we just, the Tax Relief Act just gave a huge tax benefit to corporations in which capital is concentrated. Even Opportunity Zones, which I know you just heard about, are a hierarchical model of imposing capital on communities that are designated in a deficit way and without lacking any sort of mechanism so far for community input, much less control. So you can imagine that capital doing something good, like creating affordable housing, job creation, small business formation, et cetera. But that likely takes constraints by the community in which the capital lands. And remember, that capital is coming off a long-term capital gains. Those who have long-term capital gains tend to be financial first and only investors. It's not likely that they're going to constrain the return that they're seeking based on community input, community benefit, and a multi-stakeholder ownership model. So we have to be really careful about that, that it doesn't create luxury housing that displaces fracking other polluting industries, private prisons, you name it. I think we have a unique opportunity right now to steal power back because the world globally connected but lacking local accountability has produced massive network effects, not just the telephone and the internet. And you all know that a network effect is created when the participation of each additional member increases the value for all members. So social platforms like Facebook, even shopping platforms like Amazon, the banking system itself, electoral politics, civilization is a form of network effect. So how can we use our power of creation through participation and defection to get to some of these goals of either self-limiting equity, self-liquidating equity or trust models? And so I would argue that we have a unique chance to impose after the fact some of those limitations on capital because we can threaten to leave. Facebook right now is facing that threat quite specifically because of the use of personal information. You saw that they bought Instagram and WhatsApp, that's likely because they're worried that if all of us defect from one social platform, they need to hold another one to which we might go. But that's the kind of market cap that could go away overnight and everyone's aware of that. The same for a run on the banks. That's why we have FDIC insurance to prevent that. So how can we use that power not to use it literally but to exact some of these concessions for community-based control and ownership? I think in our world, we're looking at more and more possibilities for worker cooperatives and preferentially according finance to those worker co-ops. We would consider ourselves becoming a worker co-op or some sort of employee-controlled bank. I think about in agriculture, soils are actually a collective asset. They shouldn't be owned, they should only be stewarded. So how can we redesign agriculture away from an industrial system to one that's cooperatively managed? That's it. Thank you. Thank you. Thank you.