Partial Transcript: HI, I'm Sam. Today is December 1st, 2016 and I'm here with Paul Millman to talk about the culture of employee-ownership, the structure and the culture of Chroma Technology Corp. Paul, would you like to talk about yourself a little bit and what you were doing before you helped start Chroma.
Segment Synopsis: Paul is currently the CEO and CCO of Chroma. He, like the other founders, previously worked at Omega Optical. In his time previous to the filter industry, he spent time in college, working in restaurants, teaching, bars and managing a night club in New York (which was probably the worst job he ever had).
Partial Transcript: How did you come to working with Omega? What attracted you to selling filters?
Segment Synopsis: Paul needed a job. He moved to Vermont in the late 80's. The pickings were slim according to the employment office in Brattleboro, but Omega had a job opening in sales. So Paul took it.
It took about a year for Paul to get good at the job. It took him 3 years to triple their total sales. He did this alone, aside from a customer service rep at Omega at the time, whom also became a founder of Chroma, Wendy Cross.
Partial Transcript: Okay, so leading up to getting fired from Omega, what were the tensions, what was happening in Omega that was, you know, growing those feelings of not wanting to be there. I know that Dick didn't, wasn't enjoying being there, and hence resigning after you got fired, but for you, what-- why did you not want to work anymore.
Segment Synopsis: Altogether, it was a job for Paul. And at the time, it afforded him a reasonable lifestyle.
To complicate his situation, there was Bob Johnson, founder of Omega. Paul worked with him from time to time, but they were not friends. Paul worked on--until he was fired
Partial Transcript: So when he went to fire you, how did that change your relationship?
Segment Synopsis: Johnson became the enemy upon firing Paul (1991). The other soon-to-be founders of Chroma, were in a series of different positions, some more willing to immediately leave Omega than others.
By mid-summer in 1991, Chroma was incorporated and by October the first shipment was out. In the first year, Chroma was off to a good start., being openly welcomed by the scientific community.
Partial Transcript: I think I wanted to back up actually to get your experience in employee ownership and then why when forming Chroma that you pushed for it so heavily.
Segment Synopsis: Johnson originally proposed a 30% ESOP to the employee base of Omega. This struck Paul very deeply. It resonates with his political upbringing as a socialist--employee ownership could help bring this to fruition.
Employee ownership was not a huge topic between the founders, but the question of ownership needed to be answered.
When it came to the wire, Rusty had financial backers who wanted an equity stake for early financing of the company--Paul was opposed. Dick and Jay were ambivalent about the issue at the time. While employee ownership won, Rusty did stay on for a while at Chroma, only to leave after about 6 months.
Partial Transcript: And so in the first couple years, maybe even the first decade, what kind of clients were you working?
Segment Synopsis: Scientists and biologists; microscope and equipment distributors. By 1994, Chroma was working directly with instrument (microscope) manufacturers. One of Chroma's first major company to work with was AMICO, which contributed to genetic testing.
Partial Transcript: So throughout the nineties, Chroma was based out of the, was it the Cotton Mill down in Brattleboro.
Segment Synopsis: Chroma first inhabited the Cotton Mill in Brattleboro, Vermont--constantly taking space. Eventually Chroma needed to expand, and Bellows Falls was very inviting to Chroma's needs.
The building in Bellows Falls is cleaner, has decent workflows, and is generally a better place to work.
Before moving to Bellows Falls, Chroma had between 30 and 50 people. Besides needing more space for people, Chroma needed to expand its total operations, thus moving to Bellows Falls in 2003.
Partial Transcript: So over that first 12 years before he moved up here, with an increasing employee base, how did employee ownership permeate the culture? How did you see that play out in every day work?
Segment Synopsis: Chroma invited the ICA from Boston to help organize Chroma's employee ownership plan. Chroma didn't like the cooperative or ESOP structure, and chose their own route: the third way, a mix of stock and cash profit sharing, and installing tenure and experience as important to the culture.
Decision-making was originally done via town hall style meetings as well as on the ground, decentralized without always vetting all decisions.
Partial Transcript: As the company grew, how were those decision-making processes changed and shaped to be more equal or more efficient?
Segment Synopsis: Chroma tried many things: representative bodies, coordinating and steering committees. Often, new events internally would stretch and challenge Chroma's decision-making abilities, such as the first person to leave the company, and how to buy back their shares.
Paul believes that employee ownership only works if people see beyond their own interests and to those around them. Keeping this in mind, Paul believes that lifestyles afforded by the hard work at Chroma can be maintained--so long as the threat to outside interests (like selling the company) are dissuaded.
Partial Transcript: So in the way that you were describing the difference between self-interest and collective interest with the founders, how have you seen that collective interest grow within the employee owner base as the company's grown.
Segment Synopsis: Paul is at the least skeptical; as a founder, he has the most to gain by selling the and finds it hard to impart to fellow Chromites the imperative to keep Chroma's long-term operations in the hands of its employee owners. The line of how long someone has worked at Chroma and how many shares they have creates an odd sway about whether or not it's in one's own interest to sell. Paul is hopeful that other Chromites feel the same way he does about the company and the interests of employee owners, and employee ownership.
Partial Transcript: So I kind of-- transitioning from employee ownership culture, I want to talk about how the company structure developed from when it was just the original six founders you know excluding Lindgren and how developed over the year.
Segment Synopsis: In the beginning, each founder had their specialty in developing Chroma's operations. As operations grew, meetings would be held to make decisions, but not all decisions were made in such meetings. Chroma has experienced disruptions in among the founders, trying to oust a member or so, but such have failed. The board of directors then became a functioning board, whereas before it was somewhat defunct in its activity and purpose. The founders then became permanent member of the board (unless they leave to company) and actively work in conjunction with the company's operations.
During the beginning of Chroma, coups against company leadership were attempted, but failed, as the bond among the founders proved to be stronger than imposed manipulation. An out-pour of these events resulted in the formation of a steering committee to handle management of Chroma's operations, as opposed to the board having that responsibility (around 2005, 2006).
Partial Transcript: So in directing the role of what the coordinating committee has done in the past, who or what does that structure look like now? How is the management structure developing?
Segment Synopsis: Recently Chroma has developed 5 chief positions, currently held by 3 people: executive, finance, technical, operations and customer officers. The goal is to eventually fill the 5 positions with 5 people. Several other managements positions are developing in productions, engineering and quality.
Chroma also operates a subsidiary in Burlington, Vermont, as well as three international sales offices in China, Germany and Japan.
Paul does not foresee an overbearing management structure developing, believing in the autonomy and ability in the work groups as they are currently operated.
Partial Transcript: How does [the management structure] tie into the culture and experience of being an employee owner at this company? Or how do you think it ties in to the experiences of work groups?
Segment Synopsis: Paul recounts a conversation with a fellow employee owner during the time at the Cotton Mill in Brattleboro. Chroma historically doesn't recognize illegitimate authority, often questioning the validity of those designated as their bosses. The "structure affects ownership', and Paul hopes it does so in the best way.
Partial Transcript: So we're actually at 51 minutes, are there any final remarks, comments about the topics we talked about that you want to cover before we finish?
Segment Synopsis: Paul recounts a local trust company with similar history in founding their own company, as well. From their example, Paul's central message is that employee ownership is more difficult for a variety of reasons, for a variety of different people--but it is the right way to do things; it is the fair thing to do.