When you hear or read the term “evergreen” as it relates to a company, it is not to imply that the company is somehow eco-friendly, even if it is. Rather, as used by venture capitalist Dave Whorton and Red Herring co-founder, Chris Alden, evergreen means a private, profitable, market-leading company that is designed from inception to remain independent and unsold for a long time (possibly forever). The CEOs of these companies are purpose-driven, put their people first, avoid raising capital that puts money before mission, and base their success on how well they deliver on their mission.
Whenever most people hear the word venture capitalist or even “investor”, we’re visualizing a person or entity that is injecting capital into a company with the sole purpose of recouping those dollars (with some added gains), and possibly even helping to prop the company up for an exit strategy.
There is a great article inside of the October 2015 issue of Inc. magazine that highlights the growing number of entrepreneurs who are focused and driven by building and maintaining evergreen companies, with no interest in selling the company or their interest within them. These entrepreneurs are driven by the products and services that they provide their customer base; they are motivated by the relationships that they form with customers and vendors; they wake up and go to sleep each day focused on how to create a long-term winning legacy within a company that can be around for 50, 75, 100, or 200+ years.
Evergreen entrepreneurs have returned to the basics of business ownership—building for longevity. The titans behind the economic growth of the United States weren’t working so hard and clashing so often, with the hope of one day selling to a competitor or to anyone for that matter. Cornelius Vanderbilt, John D. Rockefeller, Andrew Carnegie, J.P. Morgan and Henry Ford did not launch their ideas into enterprises with the thought of fast cash injections and easy exit strategies. They were focused on building empires. Now that’s not to say that evergreen CEOs want to build empires, but they would say that they desire to build long-standing brands and reputations that will far surpass their human lifespans.
Whorton and Alden created a manifesto at the launch of their evergreen-centered community, the Tugboat Institute, where they outlined seven characteristics that they believe clearly define evergreen companies. Listed in what they consider to be the order of importance are (with our summary definition of each):
Passionately driven by your mission and vision
Laser-focused on reaching the mission and vision regardless of what obstacles may come, and doing so for as long as it takes—like a dog with a bone, you just won’t stop until you accomplish your mission.
3. People first
Motivating and engaging your team to excel as a team, focused and inspired by the mission, vision, culture, compensation of the company; by taking care of your employees they will in turn take care of the company, its customers and vendors, and the communities that the company serves.
Taking advantage of all that comes with being a private company so that the focus can be on the long-term and flexibility operationally; something that most public or exit-oriented companies don’t have the flexibility to do.
Success is measured by the number that most closely and accurately reflects the customer value achieved.
6. Paced growth
A discipline centered on long-term strategy and an annual growth that is steady and consistent, not fast and short-term.
7. Pragmatic innovation
Your company embraces a process that is built around taking calculated, yet smart risks so that you can be innovative and continuously improving.
Whorton and Alden announced last year that they had plans of launching The Evergreen Journal, a digital publication—which they did. Tugboat Ventures (now the “Tugboat Group”) is creating a network of evergreen investors, and this network is called Tugboat Evergreen.
Read the October 2015 issue of Inc. to learn more about the rise of evergreen companies, and how the Tugboat team (and others) plans to help them reach forever. To learn more about the Tugboat Group visit: www.thetugboatgroup.com