Q&A with Hummingbird Wholesale
Employee Ownership Trust / Employee Ownership Purpose Trust
Charlie Tilt: Co-owner
Julie Tilt: Co-owner and wife of Charlie
Stacy Kraker: 2018; Director of Marketing, Sales, and Sourcing
Deirdre Geddes: 2018; Support Sales and Customer Service Team
Nathan Howard: 2022; Warehouse Manager
Kara LaVelle: 2019; Purchasing Manager
We had a moment to sit down with Hummingbird Wholesale, an organic wholesale food distributor based in Eugene, Oregon to talk about their decision to transition to employee ownership using the Employee Ownership Trust model, with a twist. They describe their model as an Employee Ownership Purpose Trust. Read more to understand why.
Project Equity: Tell us about Hummingbird. What is its history and what are you most proud of?
(Charlie) The company was originally started in 1972 under the name Honey Heaven Wholesale. We purchased the business in October of 2003. In 2017 we changed the name to Hummingbird Wholesale because we felt the name better reflected what we were trying to achieve. It was based on the fact that the hummingbird sips the nectar of the earth without harming the flower. We wanted to utilize the harvest that the earth produces without harming it.
(Deirdre) Hummingbird sells organic ingredients, but the differentiator is that we have a farm direct program, what we call distributor supported agriculture, which means that we work directly with farmers to pay for a particular amount of product upfront. It’s pretty rare, since in agriculture the farmer typically grows their product and then they get whatever the market value price is at that time.
Because we pay farmers directly, they know what they’re going to grow, and what their income generation will be. We don’t have a contract with Mother Nature so there will obviously be some variables involved.
(Kara) One of the things that makes me really proud to work at Hummingbird is our container return program and our focus on reducing waste. It’s pretty unique in our market that we have these bulk size containers that customers can return to us, and then our team uses them again. We also have a focus on continuous improvement in all of the work that we do.
(Deirdre) We focus only on organic products that are good for our environment and our health. We also try to source as close to home as possible. That allows for good alignment and for us to form great friendships with our customers.
Project Equity: Did you look into family ownership succession?
(Charlie) Yes, we did, and our girls were not interested. Sometimes with company growth, economic investments need to grow with it, and there aren’t always relatives that can meet those capacity levels.
Project Equity: Why did you choose an Employee Ownership Purpose Trust (EOPT) over other forms of employee ownership?
(Julie) We think it’s an exciting opportunity to maintain our values that are closer to the community, and the people connected to our food. They understand the value there. We know, appreciate and respect all the farmers. I have heard so many of them say thank you for giving them faith, and for not having to send their crops overseas. An EOPT allows us to maintain those connections, honor everyone for continuing that practice, and continue showing love and support for food, ecology and community.
(Charlie) Another reason we chose employee ownership is because I had an entrepreneur for a mother. She started a business, ran it for 26 years, and then was able to successfully sell it. I got to grow up watching that. I get to have that as one of my choice reels. And then I spoke with another member of the team who doesn’t have a high school education. The idea of owning her own company was so outside her history that she couldn’t imagine it as a possibility. She wasn’t born into the same privilege. Being a business owner isn’t easy, but at least now there is the possibility for financial stability and an improved livelihood that wouldn’t be possible without employee ownership.
Project Equity: Now that you’re an EOPT, what will your structure look like?
(Charlie) Because transitioning is such a big step, we’re trying to have a transitional experience that is more easily digestible. From a business perspective, we have a very complicated day-to-day environment to operate in. So we’re taking our time to experience the immersion into a new form of governance. We anticipate through the course of 2023 learning enough to have a new board and to formalize the decisions we’ve made.
By the end of the year, we’ll be looking into adding some new individual board members, and a Trust Stewardship Committee. This is another place where Project Equity will be coming in to help. This will be the first time that anyone outside the company will have access to internal conversations and financials.
Project Equity: How are people feeling about becoming owners?
(Nathan) It is a little scary because we’re moving into new, unknown territory. I’ve only been with the company for less than a year, but I’m excited about this direction and helping maintain the integrity and values that have been established.
We have a very unique and tight-knit culture. It has been absolutely wonderful to be incorporated into that.
(Deirdre) When Charlie came to the leadership team to tell us that he and Julie had decided to sell the company, my heart dropped a little bit thinking about the unknown and what it actually meant. But through the process of hearing the different options and the decision to move to the Perpetual Trust model, it just seemed so in line with the company and what it stands for.
Project Equity: What does your transition timeline look like?
(Charlie) We’re set up on a three-year transition timeline. The next three years will allow us to learn, develop and establish this new structure. After that, it should feel more-or-less back to normal like our usual day-to-day processes. We have implemented some of the foundational shifts already, like our Management meeting schedule and reporting expectations.
Project Equity: Charlie, as the current CEO, what is your role in the company going to look like moving into the future?
We have a financial goal to have a new CEO to replace me in the next few years, moving me to more board-level activity. And, gradually, over the next 10 years, my role will be less relevant in day-to-day work. My plan is to become the old fart in the corner who knows what we used to do and I can tell all the stories to all the new people.
Project Equity: What would you say to your fellow business owners about transitioning to an employee-owned model?
(Charlie) There are many businesses in the area that have been in business for 20 years or so, and as a result, the founders are looking for ways to pass on their business. We’re seeing this in a lot of family farms in the area as well. They want to pass on their businesses and the values and integrity they have built them on.
One of the downsides of selling your business to a conglomerate or someone outside of the existing business, particularly in the organic food industry, is that they can gut the culture, lay off staff, and reduce the quality of the product being produced and sold. An employee ownership model, especially an Employee Ownership Purpose Trust, maintains the values and integrity of the product and the business.
Project Equity: How has it been working with Project Equity? How did you learn about us and how did you decide we would be the ones to help you transition?
(Charlie) I originally heard of employee ownership, specifically the cooperative model, back in the 90s. That planted the seed. In the process of looking at the different options and examples of companies that had done them, and how they had turned out, I felt like employee ownership was the answer. I wanted something that would be good for me, the employees, the company and our partners. That’s when one of our local manufacturing partners (OMEP) found Project Equity and I reached out.
My initial thought was that a cooperative model would be best. After an initial analysis, we discovered that a worker cooperative wasn’t the right fit. That’s when Courtney came into the picture. She suggested we look into an employee ownership purpose trust because it supported a partial sale of the company. I think without Courtney, I wouldn’t have had the courage to do an in-depth examination of what an EOPT entailed and the repercussions it would have on everyone and everything.
I think my biggest challenge was negotiating with myself. How much do I want to sell the business for, without overburdening and adequately representing the other party as well? I obviously want to get what I feel is the true value of my company, but I also don’t want to take advantage of or set everyone else after me up for failure. That’s where the transition team really helped. Their wisdom, their capacity to understand from both perspectives, and their understanding and willingness to let me struggle where I struggled while offering their support really helped.
If I hadn’t had the help of Project Equity and the transition team, it would have just been too much. It was pretty defeating when we got to the point where we decided a cooperative wouldn’t be a good fit. The extra support made it possible.