Trident Booksellers & Café in Boulder, CO: Bootstrapping Employee Ownership
Walking into Trident Booksellers & Café on Boulder’s vibrant Pearl Street, visitors are greeted by the comforting aroma of chai tea and freshly brewed coffee. Books are carefully selected. The music feels like what a cool friend might play at a retro dinner party. The warm wood-paneled walls, eclectic furniture and assortment of chessboards is reminiscent of grandpa’s living room. A true community hub, Trident puts on a wide range of daily events: live poetry readings, language exchange nights, political meet & greets....
Perhaps the unique vibes also come from the fact that almost all the workers are also owners. At the time of writing, 20 of the 26 workers own at least 1 share (or “capital interest unit”) in the LLC, making it one of the few businesses to use the “Alternative Equity Structures” (AES) form of employee ownership in Colorado.
After 40 years in business, the COVID-19 pandemic threatened to shut down Trident, as it did many small businesses. Faced with the prospect of one of the three original owners exiting, Peter, the General Manager, proposed to transition ownership to those most invested in the success of the business: its employees.
Employee ownership made inherent sense to Peter: in a period of chaos, he wanted employees to have something solid to hold onto, something to incentivize them to stay. He liked the idea of employees adopting a mindset of ownership, being invested in the success and resilience of the business. The employee-owners that we, the Rocky Mountain Employee Ownership Center (RMEOC), spoke to agreed: participating in decision-making drew them in, and they would never go back.
Graham had been working on-and-off for Trident for 11 years when he decided to become an employee-owner and commit, two years ago. He loved the idea of having a seat at the table. It isn’t always easy to manage co-owners diverse preferences, but for Graham, politics is part of the fun. To some, it’s more work than expected. But according to Peter, it has guaranteed the success of the business in the long term. “You’re creating a family, you have to care”.
The initial handful of employee-owners bought 33% of the company, and have increased their portion of ownership ever since. Now, employee ownership hovers around 50%. The LLC issued 100 “units” (the equivalent of what corporations would call “shares”) and every employee who has been working at Trident for more than a year, whether full time or part time, can buy one or more units. Units are sold once a year at fair market value. If an employee-owner leaves, Trident or another employee-owner buys back their unit(s). Employee owners are akin to “partners” in the business. They partake in the profits, decision-making, and benefit from the increase in the value of the units they hold.
Owners communicate online continuously to keep day-to-day operations running smoothly. When more long-term, strategic or large financial decisions need to be made - usually every month or two - owners meet. Proposals are submitted in advance with supporting information (ex: Profit & Loss Statements). In the meeting, the proposer makes their case, then there is a discussion. Everyone has a chance to express their opinions. Finally, the owners vote.
While each owner has one vote for governance-level decision-making, profit is distributed according to the number of shares owned. Trident chose this “Alternative Equity Structure” as a means to put in place employee ownership by themselves, without external support, at a low cost. This new form of employee ownership is only recognized in Colorado. It refers to a wide variety of ways in which businesses can use what suits them from the cooperative model, and adapt the rest from traditional business practices. In this case, Trident used the traditional one-worker-one-vote precept of cooperatives and tweaked it to become one-owner-one-vote. Ownership is open to any worker who wants it, as in a cooperative, and governance decision-making is deeply democratic. Like in a co-op, buy-in is relatively affordable, though significant enough that employee-owners have skin in the game. However, Trident does not qualify as a cooperative. One key reason is that they distribute profits based on the percentage of the company each owner has bought into. In a cooperative, profits would usually be distributed based on hours worked. Also, Trident chose to remain an LLC and sell its units at fair market value. In comparison, cooperatives also require a buy-in from each worker-owner but it is a fixed amount that is equal for each employee and does not change with the value of the company.
All forms of employee ownership, like any ownership structure, have their areas of simplicity and their complexities. Choosing a business structure in general is a question of choosing the complexities one wants to face. For instance, a Corporation is required to have a Board, issue stock, pay taxes in a set way. Some might consider LLCs to be a simpler option. However, raising funds with an LLC or adding new partners to the business has its own set of complexity or disadvantages.
Much in the same way, Trident leadership felt that the cooperative structure had complexities they did not want to interact with. Cooperatively-owned businesses must learn to pay taxes in a new way, whereas an LLC business passes on many of the tax burdens of profit to the owners, which simplifies their tax accounting. Similarly, cooperatives require formal bylaws whose structures are preset by the law, which often require the support of an attorney. Trident had limited funds. They chose to bootstrap the structure by setting their tailor-made rules into an Operating Agreement they drafted themselves. This kept external costs low, relying almost entirely on the research and work of the general manager.
Despite the one-person-one-vote non-hierarchical governance structures, day-to-day operations still run in a traditional fashion. There are five managers at Trident, each entrusted with authority to organize workflows and schedules, hire new employees and manage some purchases.
However, the nature of the employee-ownership structure means that no decision is made without input from the team. Complaints are always addressed.
The transition has proven successful, with Trident seeing steady revenue growth in the years following the change. The café is busier than ever, benefiting from the rise in remote work, as many people now spend more time working from coffee shops. And the community has made a concerted effort to keep patronizing the establishment, now that it is employee owned. There is a sense of stability, pride, and shared responsibility that keeps the business moving forward. One employee-owner started as a dishwasher, eventually becoming a barista and part-owner, an unusual path to opportunity, as Peter points out.
Wyatt, a new employee-owner, is a prime example of how the employee-ownership model offers opportunities for growth and development. Having worked at Trident for some time, Wyatt is excited to take on more responsibility and be part of the decision-making process. “I want more input, especially on things like pricing and important business decisions,” he says. Every month, the team reviews the business's financials and discusses key decisions together. Wyatt is an artist and admits that his business acumen is still growing; he sees his ownership as a chance to learn and better understand how the business works. “This is a good place to learn how the business operates with real numbers,” he adds. Wyatt purchased one unit of the LLC to start, and he’s confident that the opportunity to be involved in key decisions is a powerful motivator. For him, ownership is not just about financial gain—it’s about having a seat at the table.
The employee-ownership model also offers an opportunity for long-term stability. Employee-owners can sell their shares back to the business if they decide to leave, and the value of the shares is regularly re-evaluated. While it may take time for new owners to see a return on their investment, the sense of pride in ownership and the shared vision for the company’s success outweigh the immediate financial rewards.
Some employees choose to remain employees, and never buy-in. They come for the great working conditions and fun environment, and leave when life takes them elsewhere. Like in a cooperative, that is perfectly fine. Ownership isn’t for everyone. Employees who don’t buy-in tend to stay as long as most employees did before employee ownership: 2-3 years on average. However, retention among employee-owners is significantly higher.
With continued growth, a stable team, and a shared sense of purpose, Trident Booksellers & Café is poised to remain an integral part of the Boulder community for years to come.